Although litigants frequently contend that the opposing party’s arguments are without factual or legal support, it is uncommon and unconventional for a litigant to contend that the opposing party has violated the FCA by advancing a purportedly weak legal argument. Despite the apparent oddity of such allegations forming the basis for an FCA claim, the Fifth Circuit was confronted with this precise issue in United States ex rel. Guth v. Roedel, Parsons, Koch, Blache, Balhoff & McCollister, No 15-30043, 2015 WL 5693302, — F. App’x —- (5th Cir. Sept. 29, 2015). In a holding that should be of particular interest to attorneys, the Fifth Circuit affirmed the dismissal of the Relator’s claims, explaining that a purportedly weak legal argument, in itself, cannot form the basis for a violation of the FCA.
Defendant, a law firm, was hired by Louisiana State University (“LSU”) to acquire and expropriate properties so that LSU could construct new medical facilities. Funding for the project was provided by the United States Department of Housing and Urban Development. To acquire a property, Defendant would have two appraisals performed and then compensate the owner at the higher amount. Defendant appraised the Relator’s property and subsequently brought an expropriation suit after Relator failed to sell his property for its appraised value.
While the parties were still litigating the expropriation suit, Relator filed a qui tam action alleging that Defendant violated the FCA by overbilling and double billing its legal work for LSU. Relator alleged that Defendant overbilled LSU by advancing arguments that lacked factual and legal support and by failing to act in good faith when negotiating settlement with the Relator. The Relator also contended that Defendant improperly double billed LSU by having multiple attorneys work on the same expropriation case.
The Fifth Circuit was understandably perplexed by the Relator’s FCA claims, explaining that the allegations were factually deficient and legally unsupported as there was no indication as to how the purported fraudulent billing gave rise to a violation of the FCA. In addressing the Relator’s overbilling allegations, the Court explained that “advancing a purportedly weak legal argument does not constitute, by itself, a false statement or fraudulent course of conduct.” As the double billing allegations, the Court explained that although the Relator may disagree with how Defendant staffed its cases, there was no indication that the use of multiple attorneys was unnecessary or improper. For Relator’s legal deficiencies, the Fifth Circuit explained that claims for services rendered in violation of a regulation do not automatically give rise to FCA liability. Accordingly, even if Defendant’s billing violated a regulation, there was no explanation as to how the violation formed the basis for an FCA claim.