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Multiple 'Construction Mistakes? Don?t Add Up To Fraud

Monday, October 04, 2010 03:47 am


False Claims Act

U.S. ex rel John Owens v. First Kuwaiti Gen. Trading & Contracting Co., 2010 U.S. App. Lexis 14610 (4th Cir. July 16, 2010)

The False Claims Act deals in fraud, not ordinary contract disputes, a circuit court recently reminded a disgruntled whistle blower.

John Owens was foreman for First Kuwaiti General Trading & Contracting Company (First Kuwaiti) on several contracts, totaling $600 million, to construct a new U.S. Embassy in Baghdad. Sometime during the project, Owens grew dissatisfied with the job and resigned. He subsequently filed a False Claims Act (FCA) suit alleging that First Kuwaiti defrauded the government by billing  or defective work. Owens claimed he had witnessed several"construction mistakes" at the job site. However, Owens? allegations amounted to no more than "run-of-the-mill contract disagreements."

First, Owens alleged that First Kuwaiti billed for substandard concrete work, work that had to be repaired. However, the contracts anticipated the need to repair minor concrete problems. And a site report conducted by an independent party stated that: (a) it would be surprising if there were no concrete problems on a project of such magnitude and [...]

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