False Claims Case Nails US Contractor for $762K

NASHVILLE (CN) - Reconsidering a $1.6 million judgment against a contractor that worked on Fort Campbell, a federal judge ordered the company to pay about half that for falsifying payroll.

At issue are the minimum requirements that the Davis-Bacon Act sets on contractors working under federal contracts to pay employees.

For its contract with the U.S. Army to construct buildings at the Fort Campbell military base, Circle C Construction LLC agreed that it would pay electrical workers a base hourly rate of $19.19, plus fringe benefits of $3.94 an hour.

Phase Tech was the subcontractor on at least 98 percent of the electrical work at the Fort Campbell project, but Circle C did not list Phase Tech's employees in its records.

Pay stubs for the original 2004 and 2005 Circle C payroll certifications showed that the workers earned between $12 and $16 an hour.

Brian Wall sued Circle C Construction LLC in 2007, alleging violations of the False Claims Act.

After the United States intervened in the action, a federal judge granted it and Wall summary judgment, trebling the damages to $1.6 million.

The 6th Circuit ultimately affirmed the liability finding but said a miscalculation required reconsideration of damages.

On remand Friday, U.S. District Judge Kevin Sharp revised the treble damages judgment against Circle C to $762,000.

"The total amount the government paid Circle C for electrical work that Phase Tech did on the affected delivery orders in Kentucky is $259,298.18," Sharp wrote. "Because compliance with the Davis-Bacon Act was a precondition of government payment, the correct measure of damages is the entire amount the government paid for that work. The government has proven that it would not have paid for that work had it known the truth. As Circle C was entitled to zero dollars for the electrical work Phase Tech did in the buildings at issue, the government's actual damages resulting from the payment of tainted claims to Circle C are $259,298.18."

Though trebling the damages per the FCA brings the total to $777,894.54, Sharp said that figure must be offset "by Phase Tech's $15,000 settlement payment."

"The court therefore will award the government $762,894.54," he concluded.

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