## Facts

- After the 2003 invasion of Iraq, the Coalition Provisional Authority (CPA) governed Iraq and used the Development Fund for Iraq (DFI) to finance reconstruction and related projects.
- The CPA contracted with Custer Battles, LLC (Custer Battles) to provide services for an Iraqi currency-exchange project.
- The invoices Custer Battles submitted on the project were paid from the DFI, a fund composed largely of Iraqi assets but also including some funds contributed by the United States.
- DRC, Inc. (DRC), which worked with Custer Battles on the project, and DRC’s managing director (relators) later reviewed project records and discovered a spreadsheet reflecting that Custer Battles had billed amounts that exceeded underlying costs.
- The relators alleged Custer Battles knowingly submitted false or inflated invoices, including through the use of affiliated entities and markups that made charges appear higher than the actual cost of goods or services.
- The relators filed a qui tam action under the False Claims Act (FCA), 31 U.S.C. § 3729 et seq., on behalf of the United States.
- A jury returned a verdict finding Custer Battles liable for FCA violations.
- After the verdict, the district court granted judgment as a matter of law for Custer Battles under Federal Rule of Civil Procedure 50(a), concluding the relators failed to satisfy the FCA’s requirements because the claims were presented to the CPA (not to U.S. officers or employees) and were paid from DFI funds (not directly from the U.S. Treasury).
- The relators appealed.

## Issues

1. Whether invoices submitted to the CPA for payment from the DFI can qualify as “claims” under the pre-2009 FCA when the United States contributed money to the DFI and U.S. contracting officers assigned to the CPA approved the invoices.
2. Whether submission of invoices for approval to U.S. government contracting officers working within the CPA satisfies the FCA’s “presentment” requirement in 31 U.S.C. § 3729(a)(1) (as then in effect), and the related “paid or approved by the Government” requirement associated with § 3729(a)(2).

## Decision

- The Fourth Circuit reversed the district court’s Rule 50(a) judgment as a matter of law in relevant part and remanded for further proceedings.
- The court held that, on the record presented, a reasonable jury could find the invoices were FCA “claims,” even though they were submitted within the CPA structure and paid from the DFI.
- The court concluded a jury could reasonably determine that U.S. contracting officers assigned to the CPA were U.S. employees acting in their official capacity, so submission of invoices to them could satisfy the statutory presentment requirement.
- The court also rejected the view that use of the DFI categorically defeated FCA coverage, reasoning that the United States’ contribution to the DFI and the role of U.S. officials in approving payments supported FCA applicability.
- Because the district court set aside the verdict based on an incorrect legal view of FCA coverage and presentment, the case was sent back for proceedings consistent with the appellate opinion.

## Legal Principles

- Under the pre-2009 FCA, a request or demand for money or property may qualify as a “claim” when it is presented to an officer or employee of the United States for payment or approval, even if routed through a separate administrative body, so long as U.S. officials act in their governmental roles.
- FCA presentment focuses on who actually receives and approves the request for payment; a claim can be “presented” to the United States when U.S. contracting officers exercise approval authority within an international or transitional authority’s process.
- The FCA may apply to claims paid from a pooled fund that includes U.S.-contributed money when fraudulent claims would deplete a fund in which the United States has a financial stake and U.S. officials approve disbursement.
- A district court may not set aside a jury verdict under Rule 50(a) based on a mistaken interpretation of FCA coverage requirements; where the legal standard applied was wrong and the evidence supports the verdict under the correct standard, reversal and remand are appropriate.

## Conclusion

The Fourth Circuit held that the FCA could reach inflated invoices submitted on a CPA currency-exchange contract and paid from the DFI because the United States had contributed funds to the DFI and U.S. contracting officers assigned to the CPA could be treated as U.S. employees who received and approved the claims; it therefore reversed the district court’s post-verdict Rule 50 judgment and remanded.


United States ex rel. DRC, Inc. v. Custer Battles, LLC, 562 F.3d 295 (2009)