Justia Aerospace/Defense Opinion Summaries

An employee of a major defense contractor, serving in a senior internal audit role, claimed to have discovered fraudulent activity involving government contracts for military aircraft. The contractor, which assembles aircraft using parts supplied by numerous subcontractors, is subject to detailed regulatory requirements intended to ensure fair pricing, including the Truth in Negotiations Act (TINA), the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement (DFARS). The plaintiff alleged that the contractor systematically ignored and concealed fraudulent inflation of cost and pricing data by its subcontractors, resulting in overbilling the government.The plaintiff brought a qui tam action under the False Claims Act (FCA), which allows private individuals to sue on behalf of the government. Previously, another relator had filed a separate FCA action against the same contractor, alleging a different fraudulent scheme: obtaining parts in bulk at a discount but charging the government full price. The United States District Court for the Northern District of Texas dismissed the plaintiff’s suit for lack of subject matter jurisdiction, ruling that the FCA’s “first-to-file” bar applied because the earlier action covered the same essential elements of fraud.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision. The appellate court found that the two complaints alleged distinct fraudulent schemes: one involving bulk pricing manipulation, and the other involving the submission of inflated subcontractor cost data. The Fifth Circuit held that the first-to-file bar under the FCA did not apply because the plaintiff’s complaint was based on a different mechanism of fraud, not merely additional details or locations of the same scheme. The court reversed the district court’s dismissal and remanded the case for further proceedings. View "Ferguson v. Lockheed Martin" on Justia Law