United States of America v. Hooker Creek Asphalt and Paving, LLC et al

Filing 122

ORDER: Granting Motions to Dismiss and Motions for a More Definite Statement 89 , 91 , and 93 . Relator shall have thirty days to file an amended complaint. Signed on 12/13/2011 by U.S. District Judge Michael R. Hogan. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
EUGENE DIVISION
UNITED STATES OF AMERICA EX REL.
MICHAEL RAY PERRY,
Case No. 08-6307-HO
Plaintiff,
ORDER
vs.
HOOKER CREEK ASPHALT & PAVING, LLC,
OREGON MAINLINE PAVING, LLC, WILDISH
STANDARD PAVING CO.; HAMILTON
CONSTRUCTION CO., J.C. COMPTON
CONTRACTOR, INC., HAP TAYLOR & SONS,
INC., KNIFE RIVER CORP., and CENTRAL
OREGON REDI-MIX, LLC.,
Defendants.
In this qui tam action brought by relator Michael Perry for
defendants' alleged violations of the United States False Claims
Act,

Perry

alleges

that

defendants

presented

or

caused

the

presentation of false claims to the United States in connection

ORDER - page 1

with certain federal transportation contracts for the construction
and maintenance of Interstates,

U. S.

Routes,

and Oregon Routes

within the state of Oregon.

In essence,

relator alleges that

defendants

failed

to

conduct

appropriate

tests

materials,

failed

to

report

results,

inadequate

on

results,

appropriate

doctored

failed to rework sections of failing material,

test

allowed

substandard materials to be used, falsely and fraudulently induced
contract change orders to coverup failing materials, and failed to
use

accurately

calibrated

equipment

to

achieve

accurate

test

results. The United States has declined to elect to intervene in
this case.
Defendants

Wildish

Standard

Paving

Company

and

Hamilton

Construction Cornpany each move to dismiss or, in the alternative,
for a more definite statement.

In addition,

defendants Hooker

Creek Asphalt Paving, LLC, J.C. Compton Contractor,
Mainline Paving, LLC, and Hap Taylor and Sons,

Inc., Oregon

Inc. collectively

move to dismiss or for a more definite statement.

ALLEGATIONS
Under

the

Federal

Aid

Highway

Program,

work

on

highway

constructions proj ects is performed by contractors who submit bills
to the state and the state submits vouchers to the Federal Highway
Administration

for

reimbursement

of

eligible

costs.

Federal

regulations prescribe guidelines to assure the quality of materials

ORDER - page 2

and construction in all proj ects under the Federal Aid Highway
Program including verification sampling and testing as well as
independent assurance of testing equipment and personnel.
The Oregon Department of Transportation administers a system
for

monitoring

and

verifying

contractors'

efforts

at

quality

control, but private contractors are ultimately responsible for
quality control.

Specifically, contractors are

required to employ well-trained certified technicians to
perform field-testing of materials for quality control,
including certified technicians for aggregate, asphalt,
embankment and base, density, mix design, concrete
control, concrete strength testing, and quality control.
To
validate
compliance
with
the
specifications,
technicians are required to have plans and specifications
on site, inspect materials, conduct required sampling
tests, monitor activities and performance, perform
analys
and make or recommend changes or adjustments,
verify the accuracy of materials data, and submit written
reports. contractor quality control technicians must
notify the contractor and the Engineer immediately when
materials are not compliant with specifications.
Amended Complaint (#75) at

~

29.

Contractors receive incentives when test results come within
specification and price reductions and/or remediation costs when
they do not.
The Oregon Department of Transportation employed relator Perry
in Region 4, Bend, Oregon, from 1983 until January 2008, when his
employment was
termination,

terminated by ODOT.

relator

held

the

From May 1999 until his

position

of

assistant

quality

assurance coordinator with responsibility to test construction

ORDER - page 3

materials and evaluate tests for compliance with specifications, as
well as calibrate laboratory and field testing equipment and review
contractor quality control programs.

During this time period,

relator allegedly observed false statements and fraudulent conduct
by

contractor

defendants

with

respect

to

quality

control

obligations.
Specifically;
on the South Bend Weigh & Safety Station project
(Contract No. 12876), Hooker Creek Asphalt and Paving
submitted bills for. highway construction work and
materials in violation of specifications for QA Program
(Base Aggregate, Subbase, and Shoulders) and Shaping and
Compacting. After failing a verification test, defendant
knowingly failed to identify the failing areas as
required. Instead, defendant re-rolled just the failed
test spot (approx. 5' x 5'), and requested another
verification test from QA. Subsequent testing showed ttat
the verification failed. Defendant knowingly failed to
identify the entire failing area and rework it until it
.met specifications. Upon learning the verification was
discovered by relator, who had refused to test the
mocked-up location, Hooker Creek arranged·for relator's
removal from the project so he could not attempt to
verify further work.

On the same project, Hooker Creek similarly billed for
work and materials in violation of specifications
requ~r~ng
Continuously· Reinforced Concrete Pavement.
Hooker Creek's first trucks to arrive on the project did
not have appropriate aggregate and did not meet fracture
specifications. Hooker Creek's QCT knowingly failed to
reject the loads, incorporating them into the project. On
information and belief, Hooker Creek on the same project
also failed to test earthwork according to quantity
requirements.
Amended Complaint (#75) at

ORDER - page 4

~~

51-52.

Defendant Hooker Creek allegedly committed similar quality
control violations on the US 26: Badger Creek-Sidwalter Rd. project
(Contract No. 12924), on the O'Neil Highway project (Contract No.
12925), on the Willowdale-Antelope project (Contract No. 12994), on
the US 26: Laughlin Road to Marks Creek project

(Contract No.

13137),

(Contract No.

on the Bend-Sisters Preservation project

13151), on the OR 58: US 97 Overcrossing (Contract No. 13311), and
on the US 97: China Hat Rd.-Baker Rd./Lava Butte project (Contract
No. 13334).

Amended Complaint (#75) at

n

53-59.

Defendant Oregon Mainline Paving"
on the Redmond Reroute, Unit 1, Phase 2 project (Contract
No. 13302),
knowingly violated standards and
specifications for Earthwork, Base Aggregate, Compaction
Requirements, Concrete Bridges Batching Tolerances, and
Limi ts of Mixture. Defendant submitted more than 60
Quality Control tests on earthwork falsely showing
passing testing results. Defendant knowingly failed to
achieve compaction before adding subsequent
fts.
Defendant, with knowledge of failed verifications,
continued to build embankment fills and submitted false
statements to the ODOT, Project Manager claiming that
material was not testable.

In this same example, Oregon Mainline Paving obtained
documents from the test instrument manufacturer to
support its claim that the equipment was not suitable for
testing the type of materials on the project. In order to
obtain these documents, defendant misrepresented to the
test instrument manufacturer the type of material to be
tested. The actual test data from both QC and QA verifies
the material was in fact testable under both ODOT
standards and the manufacturer's specifications for the
testing instrument. On the basis of defendant's false
statements and fraudulent conduct, it received a Contract
Change Order (CCO) which altered testing requirements on

ORDER - page 5

fill material and set up specific guidelines for which
materials fell under the new guidelines. Even after the
CCO was obtained, defendant knowingly failed to follow
CCO guidelines.
Amended Complaint (#75) at

n

60-61.

Defendant Wildish Standard Paving,
on the Mt. Hood-Chemult project (Contract No. 12990), ...
submitted bills for work in violation of specifications
for Concrete Bridges-Batching Tolerances. On the same
project,
defendant's work and materials violated
specifications
for
Aggregate
Subbase,
Base
and
Shoulders-Shaping and Compacting and the QA Program
requirements for Base Aggregate, by ignoring failing
compaction tests. Despite such failed test results, this
defenda:1t knowingly paved over the top of the failed
material. Defendant also violated specifications for HMAC
Production, falsely submitting tests reflecting passing
volumetrics, while verification tests failed. On tr.is
same project, defendant knowingly violated requirements
for HMACSeason and Temperature Limitations by paving
outside of specified limits.
Defendant Wildish

Standard

Paving

allegedly

committed similar

quality control violations on the OR 66: Klamath River - Spencer
Bridge project (Contract No. 13156).

Amended Complaint (#75) at 'll'll

62-63.
Defendant Hamilton Construction,
on the OS 97: Nevada Ave. to Green Springs Dr. project
(Contract No. 13040),
billed for materials in
violation of specifications for the QA Program for
Earthwork. Hamilton selectively scheduled verification
tests to be performed only in areas not representative of
the entire project area. Hamilton was required to have
its earthwork verified during construction, but it
completed construction - rocking and paving - and only
then requested QA to perform verifications. Because
earthwork cannot be verified once it is covered up by
pavement, defendant arrang~d for tests outside of normal
roadways (drainage pond. and decorative backfill under
bridges), which consisted of large cobbles. Because the

ORDER - page 6

testing areas were not representative of the actual
roadway prism, no true verifications were performed.

On the same project, Hamilton billed for work and
materials in violation of specifications for Concrete
Bridges - Batching Tolerances. In addition, four months
after concrete was placed and failed verification, a CCO
was written to lower the compressive strength of the
concrete, therefore accepting a failing product. Said CCO
was obtained on the basis of false statements and
certifications, and Hamil ton received no reduction in its
billing for the provision of non-compliant materials.
Amended Complaint (#75) at

~

64-65.

Defendant J.C. Compton Contractors,
on the Biggs-Wasco & Grass Valley project (Contract No.
12907), knowingly and falsely billed for contract
performance and materials in violation of specifications
for Earthwork, when it failed to perform required tests
to cove::: the quantity of materials and misrepresented the"
actual materials used. Defendant also knowingly violated
specifications for HMAC Production, using a false record
of passing results when three of four verifications
failed.
Defendant J.C. Compton allegedly committed similar violations on the
Cotton Wood-Freemont project (Contract No.12985).
(#75) at

~~

Amended Complaint

66-67.

Defendant Hap Taylor,
on the Grandview Dr. -Nels Anderson place (Contract No.
12884),
knowingly submitted bills in violation of
specifications with respect to HMAC-Compactors. To falsely
report it had achieved the required compaction, defendant
used rollers that were smaller than specifications allowed.
This method took less compactive effort (weight) to achieve
compaction, with the mix compacted too easily. Defendant
knew that it had problems with the volumetric properties
of the HMAC, and yet falsely and fraudulently failed to
report it.

ORDER - page 7

Defendant Hap Taylor allegedly committed similar violations on the
US 97: Riley Bridge Bend project (Contract No. 10679), on the Or 16:
Glacier-Highland Couplet project

(Contract No.

13072), on the US

97/26 Willow Creek-Depoe Rd. project (Contract No. 13077), on the US
97: Redmond Reroute, Phase 1, Unit IB (Contract No. 13165), on the
OR 31: Silver Creek Bridge pr6ject (Contract No. 13185), and on the
US 97 @ S. Century Drive, Sunriver project (Contract No. 13189), on
the OR 126: Prineville Crooked River Bridge (Contract No. 02761).
Amended Complaint at

~~

68-74.

The list of projects in which defendants allegedly made false
and fraudulent claims includes many other projects listed and not
listed in the complaint.
failure

As a result of the false statements and

to comply with quality control requirements,

defendants

allegedly unfairly reduced their costs and increased their profits.
Had the federal government known about the false statements and
fraudulent conduct, it would not have paid hundreds of millions of
dollars in federal highway funds to defendants.

DISCUSSION
Relator alleges defendants conduct violated the False Claims
Act, 31 U.S.C.

§

3729(a)(1).

Relator also alleges that defendants

conspired to violate the False Claims Act.
In alleging claims of fraud,
relator

to

ORDER - page 8

allege

the

Fed.

circumstances

R.

Civ.

P.

constituting

9 (b)

requires

fraud

with

particularity including the who,

what,

when,

where,

and how in

addition to what is false or misleading about a statement and why.
Ebeid ex reI. U.S. v. Lungwitz, 616 F.3d 993, 999 (9th Cir. 2010).
Unlike the securities fraud context, the particularity requirement
is not relaxed for claims arising under the False Claims Act because
the False Claims Act is geared primarily to encourage insiders to
disclose information necessary to prevent fraud on the' government.

Plaintiff alleges violations of 31 U. S. C.
(a) (1)

(8),

and (a) (1) (c).

§§

372 9 (a) (1) (A) ,

Although Congress amended the False Claims

Act in 2009, the prior version controls here.

See 123 Stat 1617,

1625:
The amendments made by this section shall take effect on
the date of enactment of this Act [May 20, 2009] and shall
apply to conduct on or after the date of enactment, except
that-- (1) subparagraph (8) of section 3729(a) (1) of title
31, United States Code, as added by subsection (a) (1),
shall take effect as if enacted on June 7, 2008, and apply
to all claims under the False Claims Act (31 U.S.C. 3729
et seq.) that are pending on or after that date.
See also Cafasso, U.S. ex reI.
637 F.3d 1057, 1051 n.1

V.

General Dynamics C4 Systems, Inc.,

(9th Cir. 2011)

citing Hopper

V.

Solvay

Pharmaceuticals, Inc., 588 F.3d 1318, 1327 n.3 (11th Cir. 2009) in
which the Eleventh Circuit noted:
In May 2009, Congress enacted the Fraud Enforcement and
Recovery Act, which amended 31 U.S.C. § 3729 (a) (2) (2003),
replacing the words "to get a false or fraudulent claim
paid or approved by the government" with the words
"material to a false or fraudulent claim." Pub. L. No.
111-21, § 4, 123 Stat. 1617, 1621. Section 4 (f) (1) of the
Act provides. that this change "shall take effect as .if

ORDER - page 9

enacted on June 7, 2008, and apply to all claims ... that
are pending on or after that date." 1d. § 4 (f) (1), 123
Stat. at 1625 (emphasis added). We interpret the word
"claim" in section 4(f) to mean "any request or demand ...
for money or property," as defined by 31 U.S.C. §
3729 (b) (2) (A) (as amended May 2009). While this case was
pending on and after June 7, 2008, the relators do not
allege that any claims, as defined by § 3729 (b) (2) (Al, were
pending on or after June 7, 2008. Therefore, we conclude
the Fraud Enforcement and Recovery Act does not apply
retroacti vely to this case. See United States v. Sci.
Applications Int'l Corp., No. 04-1543, 2009 WL 2929250, at
*13-14
(D. D.C.
Sept.
14,
2009)
(concluding Fraud
Enforcement and Recovery Act not retroactive because no
claims were pending on or after June 7, 2008).
Relator does not allege any claims for payment were pending on June
7, 2008, and likely cannot so allege given that that date is six
months

after

his

Transportation.
presentment

termination

from

the

Oregon

Department

of

Accordingly, relators claims relate roughly to the

provision,

the

false

conspiracy provision of 31 U.S.C.
The 2006 version of 31 U.S.C.

records

provision,

and

the

3729(a) (1-3) of 2006.

§
§

3729(a) provides, in part,

Any person who(1) knowingly presents, or causes to be presented, to an
officer or employee of the United States Government or a
member of the Armed Forces of the United States a false or
fraudulent claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used,
a false record or statement to get a false or fraudulent
claim paid or approved by the Government; [or]
(3) conspires to defraud the Government by getting a false
or fraudulent claim allowed or paid;
Defendants contend that the. amended complaint is deficient as
to each

clai~

ORDER-page 10

specifically and in general for lack of plausibility

and

particularity.

In

addition,

defendants

contend

that

the

complaint also fails to properly allege subject matter jurisdiction
or

that

the

alleged

conduct

occurred

within

the

statute

of

limitations.

~

Subject Matter Jurisdiction
Fed. R. Civ. P 8(a) requires a short and plain statement of the

grounds for jurisdiction.

The applicable version of the False Claims

Act provides that
No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative
hearing, in a congressional, administrative, or Government
Accounting Office report,
hearing,
audit,
or
investigation, or from the news media, unless the action
is brought by the Attorney General or the person bringing
the action is an original source of the information .
. . . For purposes of this paragr.aph, "original source" means
an individual who has direct and independent knowledge of
the information on which the allegations are based and has
voluntarily provided the information to the Government
before filing an action under this section which is based
on the information.
31 U.S.C.

§

3730(e) (4) (A) and (B)

(2006).

Relator alleges that there has been no public disclosure and
that he is an original source.

Relator has not pleaded whether he

first provided the information to the government which is required
to demonstrate that he qualifies a public source, but he has also
alleged that there has been no public disclosure.

This would be

sufficient to meet the jurisdictional requirement of the False Claims
Act,

however,

ORDER - page 11

relator also alleges the original source exception

which implies that there has in fact been a public disclosure at
least

by

him.

Indeed,

relator

specifically

alleges

that

he

"voluntarily provided ... information to the Oregon secretary of
State's Office, to the Federal Bureau of Investigation and the Office
of the Attorney General of the United States."
(#75) at

~

44.

Amended Complaint

Accordingly, the complaint is deficient with regard

to allegations of subject matter jurisdiction because it must include
additional detail regarding the original source assertion.

The issue

needs to be pleaded because if there has been a public disclosure,
timing and the content of the alleged disclosure by relator will be
significant." The motion to dismiss is granted, without prejudice to
amend, on this basis.

~

Fraud Allegations
Relator

specifically

alleges

the

noted

projects

on

which

defendants made fraudulent claims for Federal Aid Highway Program
funds are examples only and are not intended to include all of the
contracts during the liability period in which defendants engaged in
fraudulent activity.

Amended Complaint (#75) at

under any of the claims under 31 U.S.C.

§

~

76.

The elements

3729(a) noted above are;

(1) a false statement or fraudulent course of conduct, (2)
made with scient€r, (3) that was material, causing (4) the

IRelator also contends that he did not learn of the fraud
through any public disclosure, but how he learned of the fraud is
irrelevant as to the public disclosure element of jurisdiction.
Moreover, if relator himself made a public disclosure, then he
must demonstrate that he is the original source.
ORDER - page 12

government to payout money or forfeit moneys due. The
question remaining is whether relators in this case have
alleged facts satisfying all four of these elements.
U.S. ex rel. Hendow v. University of Phoenix, 461 F.3d 1166, 1174
(9th Cir. 2006).
Relator alleges that there are precise contract documents such
as the "Brown Book" and the "Wine Book" requiring specific quality
materials, quality control tests, and use of appropriate devices,
etc.

Relator

further

alleges

that

during

his

employment

he

personally observed and documented fraudulent conduct by defendants
with

respect

to

quality

control

obligations.

However,

the

allegations regarding the fraudulent conduct is woefully lacking in
detail.
for

Relator generally alleges that defendants submitted bills

highway

construction

work

and

specifications for quality assurance.

materials
However,

in

violation

of

relator fails to

allege who committed the alleged misconduct (other then the defendant
companies generally), what invoices contained false statements or
even

the

specific

false

statements

themselves.

There

are

no

allegations of when the allegedly deficient work was done (or not
done), or when false records or statements were made.

Other than a

general location for the contract itself, relator fails to allege
where the

specific defective

construction took place.

Indeed,

relator alleges that he does not have access to records underlying
defendants billings for work performed.
Lack of knowledge of the billings is not grounds for relieving
relator from Rule 9's particularity requirement.
ORDER - page 13

See Ebeid ex reI

United States, 616 F.3d at 999 (it is not appropriate to jettison the
particularity requirement simply because it would facilitate a claim
by an outsider especially because the False Claims Act is geared
primarily to encourage insiders to disclose information necessary to
prevent

fraud

on

the

government).

In

addition,

even

under

circumstances of cookie cutter fraud, a relator may be able to avoid
pleading all facts supporting each and every instance of fraudulent
billing, Rule 9 still requires a relator to plead the fraud with some
level of specificity.

Id.

In this case, the allegations go beyond cookie cutter fraud that
merely asserts repeated substantially similar fraudulent billing
The

practices.

amended

complaint

suggests

a

wide

variety

of

misrepresentations and fraudulent conduct regarding quality control
and to simply allege vague "examples" is insufficient to apprise
defendants of the particular conduct constituting fraud to permit a
defense.
utterly

The motion to dismiss is granted because the complaint
fails

to

state

with

particularity

the

circumstances

constituting fraud including the who, what, when, where, and how of
the misconduct.

~

rd. at 998.

Defendants are not only left in the

dark regarding what specific conduct allegedly constitutes fraud, but
also cannot determine if specific tests, etc, that may have been nonconforming with various quality control standards were nonetheless
non-fraudulent because of, for instance, a change order or reduced
payments.

This

particularity.
ORDER - page 14

is

precisely

why

the

federal

rules

require

In addition, the amended complaint fails to properly allege a
presentment claim under the 2006 version of 31 U.S.C.
Relator

alleges

that

Section 3729 (a) (1)

defendants

submitted bills

§

to

3729(a) (1).
the

state.

requires relator to allege that a defendants

presented a false or fraudulent claim to the federal g.overnment.
Allison Engine Co., Inc. v. U.S. ex rei. Sanders, 553 U.S. 662, 671
(2008).

Relator argues that defendants submiUed the bills to the

Oregon Department of Transportation intending to cause it to submit
vouchers to the Federal
However,

Highway Administration for reimbursement.

the state is the grantee of funds in such a case,

defendants.

not

Defendants did not submit a request for approval of

payment to the federal. government.

Therefore,

relator's section

3729 (a) (1) presentment claim fails to allege a claim for relief.

See

380 F.3d 488, 492 (D.C.Cir.
2004) :
Totten, now with the support of the Government, advances
an alternative argument: that a claim submitted to Amtrak
is effectively a claim presented to the Government. Thus
Totten asserts that ~the [False Claims Act] covers claims
presented to grantees," ... and relies on dicta from United
States ex reI. Yesudian v. Howard University, 153 F.3d 731,
738 (D.C.Cir. 1998), which suggest that claims presented
to grantees may be considered ~'effectively' presented to
the United States" if the claims are paid with funds the
grantee received from the Government ....
[Such] reading of the statute would ~wri te the clear
unambiguous language of Section 3729 (a) (1) entirely out of
the Act." ... Liability under Section 3729 (a) (1) arises
when any person ~knowing1y presents, or causes to be
presented, to an officer or employee of the United States
Government ... a false or fraudulent claim for paYment or

ORDER - page 15

approval," 31 u.s.c. § 3729(a) (1) (emphasis added); Totten
and the Government offer no plausible explanation for how
presentment of a claim to Amtrak can satisfy the clear
textual requirement that a claim be presented to a federal
officer or employee.
Although funds the state paid to defendants may have come from
funds reimbursed by the federal government to the state, a violation
of the False Claims Act cannot be made under the facts alleged.

Id.

at 494 (rejecting that it is also possible to read the language to
cover claims presented to grantees, but effectively presented to the
United States because the payment comes out of funds the federal
government gave the grantee.).

Given that the 2009 amendments were

specifically aimed at rectifying this situation, relator's apparent
argument that reimbursement provided to the grantee state after
paying the defendants should be viewed as within the subject language
is rejected and the presentment claim is dismissed.
leave

to

amend this

claim only he

can

Realtor may have

reasonably allege

that

defendants presented claims for payment to the federal government.
Defendants next argue that relator fails to allege the specific
intent required for a false records claim under the former 31 U.S.C.
§

3729 (a) (2) .
What § 3729(a) (2) demands is not proof that the defendant
caused a false record or statement to be presented or
submitted to the Government but that the defendant made a
false record or statement for the purpose of getting "a
false or fraudulent claim paid or approved by the
Government." Therefore,
a subcontractor violates §
3729 (a) (2) if the subcontractor submits a false statement
to the prime contractor intending for the statement to be
used by the prime contractor to get the Government to pay
its claim
If a ... defendant makes a false statement

ORDER-page 16

to a private entity and does not intend the Government to
rely on that false statement as a condition of payment, the
statement is not made with the purpose of inducing payment
of a false claim "by the Government." In such a situation,
the direct link between the false statement and the
Government's decision to payor approve a false claim is
too attenuated to establish liability. Recognizing a cause
of action under the rCA for fraud directed at private
entities would threaten to transform the rCA into an
all-purpose antifraud statute.
Allison Engine Co .. Inc., 553 U.S. at 671.
Because relator does not provide specific allegations regarding
the alleged fraudulent billings or even what the specific false
statements

in

those

billings

are,

it

cannot

be

determined

if

defendants intended the federal government to rely on any of the
statements.

There are insufficient allegations of what statements

were made to the state and what statements the state passed on to the
federal

gover~ment.

In addition,

"getting a false or fraudulent

claim 'paid ... by the Government' is not the same as getting a false
or

fraudulent

claim paid

using

'government

funds.'

... Under

§

3729(a) (2), a defendant must intend that the Government itself pay
the claim."

Id. at 669.

Because the complaint explicitly alleges

that the state paid defendants and that the government reimbursed the
state, it is unclear if defendants could amend this claim to properly
allege a violation.
As to the conspiracy claim, relator concedes the claim under
former 31 U.S.C.

§

3729(a) (3) and that claim is dismissed without

prejudice.
Relator
ORDER· page 17

also

alleges

that

defendants

knowingly made

false

certifications of compliance with regulations and laws that were a
precondition of payment in violation of 31 U. s. C.
certification

claim

still

requires:

fraudulent course of conduct;
material; causing (4)

(1)

a

§

372 9 (a).

false

(2) made with scienter;

A false

statement

or

(3) that was

the government to payout money or forfeit

moneys due.

U.S. ex rel. Hendow v. University of Phoenix, 461 F.3d

1166,

(9th

1174

Cir.

2006).

For

a

certification claim,

non-

compliance alone is insufficient, rather, certification must be a
prerequisite to obtaining government benefits.
v. Anton,

91 F3d. 1261, 1266-67

(9th Cir.

U.S. ex reI. Hopper

1996).

The complaint

alleges that defendants must, as a condition of receiving payment,
adhere to contract obligations set forth in contract documents and
that the Oregon Department of Transportation administers the system
pursuant to federal obligations and that the state sets the standards
and specifications.

Amended Complaint

(#75)

at

'l['j[

26-28.

The

complaint is devoid of allegations regarding the federal regulations
and laws defendants must have certified compliance with in order to
be paid.
A certification claim can be implied, however.

But, the implied

false certification theory shares common limitations with the express
false certification theory.

Express certification, as noted, means

that the defendants seeking payment certify compliance with a law,
rule or regulation as part of the process through which the claim for
payment

is

ORDER - page 18

submitted.

Implied false

certification occurs when

defendants have previously undertaken to expressly comply with a law,
rule, or regulation, and that obligation is implicated by sUbmitting
a claim for payment even though a certification of compliance is not
required

in

the process

of

submitting the

claim.

Under both

theories, the false certification of compliance creates liability
when certification is
benefit.

a prerequisite to obtaining a government

Ebeid, 616 F.3d at 998.

Materiality is satisfied under

both theories only where compliance is "a sine qua non of receipt of
state funding." Id.

This claim should is dismissed as inadequately

pled for this reason as well as insufficient allegations regarding
scienter and materiality given that the alleged fraudulent statements
themselves have only been vaguely stated.
Given the limited allegations of fraud, the motions to dismiss
are granted. 2

Because this is a complex case relator will be allowed

to amend if he has any further knowledge of the circumstances of the
alleged fraudulent activity.

Accordingly, the motions for a more

definite statement are granted as well.
The amended complaint should

include the "who, what, when,

where, and how" to support each element of the alleged False Claims
Act violations with regard to each false claim supposedly made by

2The lack of specificity also makes it impossible to
determine if there is a statute of limitations defense given the
lack of dates for the alleged fraudulent conduct. The
limitations period for the False Claims Act is generally six
years and can be extended to ten, but still must be brought
within three years of obtaining relevant information.
ORDER - page 19

each defendant as well as the conduct alleged to be fraudulent.
addition,

the

amended

regarding

the

intention

complaint
of

should

defendants

include
in

In

specific

facts

alleged

false

making

statements as well as the materiality of the false statements or
conduct.

Finally,

the amended complaint should include specific

facts regarding the request for payment and to whom such requests
were made.

CONCLUSION
For the reasons stated above, the motions to dismiss and motions
for

a

more

definite

statement

are

granted

(#s

89,

91

and

93).

Relator shall have thirty days to file an amended complaint curing
the deficiencies noted above.
DATED this

e

ORDER - page 20