Crowell & Moring recently achieved two substantial victories for its client, Academi Training Center LLC (“ACADEMI”) in a qui tam False Claims Act case in the Eastern District of Virginia . The qui tam relators accused ACADEMI of billing for personnel who did not serve in the labor categories in which they were billed and for personnel who had not been qualified on belt-fed weapons as required under its contract. They also alleged that ACADEMI retaliated against them in violation of the FCA’s whistleblower protections, and sought to advance their claim in federal court instead of in arbitration. The court dismissed the false claim counts and referred the retaliation claims to arbitration.

The court dismissed the false labor billing allegations on two alternative grounds. First, the court held that the FCA’s first-to-file provision barred these allegations. That provision generally precludes a qui tam relator from bringing an action based on the facts underlying a pending case. Because the labor billing allegations had already been made in United States ex rel. Davis v. U.S. Training Ctr., No. 11-2180, 2012 WL 6052051 (4th Cir. Dec. 6, 2012), the court held that the first to file bar applied. Crowell & Moring won a jury verdict in the Davis case in 2011 and that outcome was recently affirmed by the Fourth Circuit. Second, the court also held that the FCA’s public disclosure bar precluded these claims. The court held that the public disclosure bar remained a jurisdictional one and found that the Davis complaint qualified as a public disclosure under the FCA, as did a witness declaration filed in that case. The court ruled that the relators’ knowledge did not materially add to the already disclosed allegations and that therefore they did not qualify under the “original source” exception to the public disclosure bar. The court dismissed the labor billing claims under both the first to file and public disclosure bars.

The court also dismissed the weapons qualification allegations under the public disclosure bar, finding that certain media coverage had served to make these allegations public. Because the relators had not voluntarily disclosed their knowledge of weapons allegations to the government prior to this media coverage or the filing of their suit, they could not qualify as original sources.

In addition, the court stayed the relators’ retaliation claims pending arbitration. The court rejected the relators’ request that it decide whether the dispute was arbitrable instead finding a “clear and unmistakable” intent among the parties to resolve any dispute, including one over aribtrability, in arbitration. The court also refused to declare the arbitration agreement unconscionable. It found relators’ argument on that point “neither clear, nor relevant,” under recent Supreme Court precedent that had held that where the delegation of arbitrability is proper, the arbitrator is to decide the enforceability of the agreement. Thus, the parties were directed “to submit promptly their disputes to arbitration.”