This blog entry was written by Connie N. Bertram, who represented the defendant contractors in the proceedings before the district court.
Plaintiff, former engineer for defendant Impact Science & Technology, Inc. (IST), brought suit against IST and related entities under the whistleblower provisions of the False Claims Act (FCA) in 2007. A federal district court in Maryland granted summary judgment in favor of IST, finding that the plaintiff had not satisfied any of the elements of a claim under the FCA. The Fourth Circuit affirmed the district court’s decision on March 21, finding that the plaintiff’s internal complaints and discussions regarding heat testing on module used in a CIED system and discussions with the government about those complaints were not activities protected under the FCA.
The Fourth Circuit first concluded that the plaintiff’s internal “complaints” regarding the modules did not rise to the level of protected activity. The Fourth Circuit found that the plaintiff had diagnosed a problem with how the modules reacted under elevated temperatures, helped to develop the temperature compensation pads to fix that problem, and then disagreed with IST’s decision not to recall the units in the fields, even though there was no evidence that they did not meet the government’s performance specifications. However, because the temperature issue that the plaintiff claimed to have diagnosed and reported “was not severe enough in degree to trigger any contractual obligation on IST’s behalf,” those internal complaints were not protected activity.
The Court pointed to the fact that the temperature issue at the module level did not prevent the system as a whole from meeting the government’s standards, stating that:
There is a pivotal distinction here between the iterative process of product improvement and fatal performance flaws. Product improvement is part of the natural process of research and development. The diagnosis of a problem and subsequent adaptation is mere product improvement if the problem does not cause the product to fall below contractual standards of performance. A fatal performance problem, on the other hand, would cause the product to fail contractual standards.
The Court noted that “[w]e must safeguard a contractor’s ability to make iterative improvements without compromising the utility of the product in the field at the time.”
The Court also rejected the plaintiff’s claim that he engaged in protected activity by complaining about IST’s alleged false certifications of compliance or failure to implement a quality assurance plan (QAP). The Court concluded that, because IST only had an obligation to report performance issues (as opposed to product improvements), the plaintiff failed to satisfy the essential elements adopted in Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999). With respect to the QAP, the Court concluded IST’s failure to adopt a formal QAP was not a material false certification, finding that “[e]very contractual breach is not a basis for a FCA action.” The Court noted that, although IST did not have a formal QAP in place, it engaged in testing at both the module and system level and the results of it improved the performance of the system.
The Fourth Circuit also rejected the plaintiff’s claim that he engaged in protected activity because he initiated a government investigation. Although the FCA protects an employee who “supplies information that sets off an investigation,” there must be a distinct possibility that the investigation he triggers will lead to a viable FCA claim. Because the concerns raised by the plaintiff, including perceived testing deficiencies, the lack of a QAP and claimed false billing, did not raise a distinct possibility of a viable FCA claim, they were not protected activity. The Court noted that “[w]hile Glynn may have perked the government’s ears, he had no protected basis for doing so under the FCA.”