Us Ex Rel. Edwin P. Harrison v. WESTINGHOUSE SAVANNAH RIVER No. 02-2020 COMPANY

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 US EX REL. EDWIN P. HARRISON,
Plaintiff-Appellee,
v.
WESTINGHOUSE SAVANNAH RIVER No. 02-2020 COMPANY,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Amicus Supporting Appellee. 
 US EX REL. EDWIN P. HARRISON,
Plaintiff-Appellant,
v.
WESTINGHOUSE SAVANNAH RIVER No. 02-2092 COMPANY,
Defendant-Appellee.
UNITED STATES OF AMERICA,
Amicus Supporting Appellant. 
Appeals from the United States District Court
for the District of South Carolina, at Aiken.
Cameron M. Currie, District Judge.
(CA-94-3332-1-22)
Argued: September 25, 2003
Decided: December 19, 2003
Before WILLIAMS and SHEDD, Circuit Judges, and
HAMILTON, Senior Circuit Judge.

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Affirmed by published opinion. Judge Shedd wrote the opinion, in
which Judge Williams and Senior Judge Hamilton joined.
COUNSEL
ARGUED: Daniel J. Westbrook, NELSON, MULLINS, RILEY &
SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appellant.
Michael David Granston, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Amicus Curiae. Richard E. Miley, North Augusta, South Carolina, for
Appellee. ON BRIEF: Jeffrey S. Patterson, NELSON, MULLINS,
RILEY & SCARBOROUGH, L.L.P., Columbia, South Carolina, for
Appellant. Robert D. McCallum, Jr., Assistant Attorney General, J.
Strom Thurmond, Jr., United States Attorney, Douglas N. Letter,
Sambhav N. Sankar, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Amicus Curiae.
OPINION
SHEDD, Circuit Judge:
In this False Claims Act case, Edwin Harrison, the qui tam relator,
alleged that Westinghouse Savannah River Company (Westinghouse
or WSRC) falsely certified to the Department of Energy (DOE) that
no organizational conflicts of interest (OCI) existed between Westing-
house and General Physics Corporation (GPC) relating to a proposed
$2.75 million government subcontract. After a combined jury and
bench trial, the district court entered judgment in favor of Harrison.
Westinghouse appeals, and Harrison cross-appeals. We affirm.
I.
Westinghouse is the management and operations contractor for
many of DOE’s activities at the Savannah River Site near Aiken,
South Carolina.1 In the 1980s and 1990s, Westinghouse attempted to
1For reasons we discuss in section III.A, we view the evidence in the
light most favorable to Harrison.
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develop a $500 million In-Tank Precipitation (ITP) facility to store
radioactive waste at the Savannah River Site. As part of this project,
Westinghouse began developing a training program for the employees
who would eventually operate the ITP facility. By 1992, the training
program was behind schedule. James Smith, an experienced Westing-
house manager, was put in charge of developing a Recovery Plan to
get the training program back on schedule. Before Westinghouse
could subcontract the work, however, it had to obtain approval from
DOE.
Smith had several people working for him in developing the
Recovery Plan. One of these individuals, Michael Kirkpatrick, was a
GPC employee who was working at Westinghouse under a contrac-
tual agreement known as a Basic Ordering Agreement (BOA). Wes-
tinghouse relied heavily on BOAs from GPC and other off-site firms
in developing the Recovery Plan. Ultimately, Smith’s team decided
that Westinghouse should hire a subcontractor to design and imple-
ment the training program even though cost estimates showed that
Westinghouse could have done the work in-house for less money than
it would cost to hire a subcontractor.
Kirkpatrick, in particular, helped prepare some of the briefing
papers that Smith used to convince DOE to allow Westinghouse to
subcontract the training program. Kirkpatrick was Smith’s "right-
hand man." J.A. 563. Mitchell Frank, a Westinghouse employee,
expressed concern to Smith that Kirkpatrick was intimately involved
in preparing procurement sensitive documents. Frank also told Smith
that he was concerned that any subcontractor with access to such
information would have an unfair advantage over other subcontractors
bidding for the training subcontract.
Westinghouse submitted the subcontracting proposal to DOE for
approval. Westinghouse estimated that the subcontract would be short
term and would cost $2.75 million. DOE approved Westinghouse’s
proposal to subcontract the training program.
Westinghouse next prepared a Request for Proposal (RFP) and
sought bids from fourteen firms. Only four firms returned bids on
time, one of which was GPC. Kirkpatrick helped GPC prepare its bid.
As part of its proposal, GPC submitted a certification to Westing-
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house attesting that it had no OCIs in connection with the potential
award of the subcontract. An OCI is, in part, a relationship or situa-
tion in which an entity bidding on a government subcontract receives
an unfair competitive advantage relating to the work to be performed.
Smith was one of three Westinghouse employees who reviewed the
four bids. Based on this review, Westinghouse selected GPC to
receive the training subcontract even though another bidder submitted
a lower bid. Before awarding the subcontract to GPC, however, Wes-
tinghouse was required to obtain approval from DOE.
William Bowers, a Westinghouse procurement specialist, was
responsible for submitting the Procurement Under Review (PUR)
package to DOE recommending that DOE approve subcontracting the
training program to GPC. Bowers included in the PUR package
GPC’s bid and certifications, including GPC’s certification that no
OCIs existed between GPC and Westinghouse.
In September 1992, DOE approved awarding the training subcon-
tract to GPC. The original purchase order was approved for just under
$2.5 million. DOE thereafter approved twenty-five additional
invoices submitted by Westinghouse. Ultimately, DOE paid more
than $9 million for the work performed by GPC on the ITP training
program.
II.
Harrison, formerly a vice president at GPC, brought this qui tam
action against Westinghouse alleging several violations of the Federal
Civil False Claims Act (FCA), 31 U.S.C. §§ 3729-33. The govern-
ment investigated Harrison’s claims but declined to intervene.2
2The government intervened on appeal to advance three arguments: (1)
the district court correctly found that the false no-OCI certification was
material; (2) the district court erred in instructing the jury that a corpora-
tion cannot be held liable under the FCA unless a "single actor" of the
corporation possessed the scienter required under the FCA; and (3) the
district court correctly found no actual damages.
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Harrison’s original complaint alleged at least ten different claims.
He alleged that Westinghouse falsely proposed to DOE that it would
be prudent to subcontract the training program rather than do it in-
house; falsely certified that GPC had no OCIs; understated the origi-
nal scope of the work; affixed a false signature on a purchase requisi-
tion form; breached its fiduciary duty; allowed GPC to understate its
overhead costs; allowed GPC to inflate labor costs; directed GPC to
circumvent normal procurement systems to inflate the cost of sup-
plies; failed to effectively manage the subcontract to safeguard
against theft, fraud, and waste; and conspired with GPC to defraud the
government.
The district court dismissed the complaint in its entirety. It ruled
that no false claim had been made either because Harrison’s com-
plaint constituted allegations of inefficiency rather than fraud or
because the alleged false statements did not relate to a "claim" as con-
templated under the FCA.
On appeal, we affirmed in part, reversed in part, and remanded.
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir.
1999) (Harrison I). We affirmed the dismissal of all but two of Harri-
son’s claims: (1) Westinghouse knowingly understated the cost of
subcontracting the training program (the low-ball claim) and (2) Wes-
tinghouse falsely stated that GPC had no OCIs relating to the subcon-
tract (the false OCI certification claim).
On remand, this case was tried before a jury. The district court
granted judgment as a matter of law to Westinghouse as to Harrison’s
low-ball claim. Harrison does not appeal this ruling.
As for the false OCI certification claim, the district court submitted
two interrogatories to the jury:
(1) Has Harrison proven by a preponderance of the evi-
dence that the certification of General Physics regard-
ing organizational conflicts of interest was false under
the applicable regulatory standard? and
(2) Has Harrison proven by a preponderance of the evi-
dence that at the time WSRC passed the certification
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on to the government, WSRC had knowledge of the
falsity of the certification under the knowing standard
applicable in this case?
J.A. 1072. The jury answered both interrogatories in the affirmative.
After ruling that the issue of materiality was for the court, rather than
the jury, to decide, the district court found that the no-OCI certifica-
tion that Westinghouse submitted to DOE was material.
The district court also ruled that Harrison failed to prove any actual
damages. However, after considering aggravating and mitigating cir-
cumstances, the district court assessed a penalty against Westing-
house, finding that the false certification negatively affected the
integrity of the bidding process. In determining the amount of the
penalty, the court found that Westinghouse had submitted twenty-six
funding requests for the training program subcontract — the initial
subcontract proposal that contained the false OCI certification and
twenty-five subsequent invoices. The district court assessed a penalty
of $7,500 (from a possible range of $5,000 to $10,000) as to each of
these twenty-six funding requests, for a total penalty of $195,000. Of
this amount, the district court awarded $58,000 to Harrison, represent-
ing the maximum percentage allowed (30%) to a qui tam relator
under the FCA. See 31 U.S.C. § 3730(d)(2).
III.
In its appeal, Westinghouse contends that the district court erred by
finding that the OCI certification was material. It also argues that it
lacked the requisite scienter under the FCA. Last, Westinghouse
asserts that the false claims Harrison attempted to prove at trial were
not alleged with the necessary specificity in his complaint.
The FCA provides, in pertinent part:
Any person who—(1) knowingly presents, or causes to be
presented, to an officer or employee of the United States
Government . . . a false or fraudulent claim for payment or
approval . . . [or] (2) knowingly makes, uses, or causes to
be made or used, a false record or statement to get a false
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or fraudulent claim paid or approved by the Government . . .
is liable to the United States Government for a civil penalty
of not less than $5,000 and not more than $10,000, plus 3
times the amount of damages which the Government sus-
tains because of the act of that person . . . .
31 U.S.C. § 3729 (a)(1)-(2). To state a claim under the FCA, the
plaintiff must prove: (1) that the defendant made a false statement or
engaged in a fraudulent course of conduct; (2) such statement or con-
duct was made or carried out with the requisite scienter; (3) the state-
ment or conduct was material; and (4) the statement or conduct
caused the government to pay out money or to forfeit money due.
Harrison I, 176 F.3d at 788. Of these four elements, Westinghouse
now challenges only two — materiality of the false statement and
scienter.3
A.
Westinghouse first contends that the falsity of the no-OCI certifica-
tion was not material to the government’s decision to fund the GPC
subcontract.4 Thus, it argues that the district court erred by not grant-
ing judgment as a matter of law in its favor.
3At trial, Westinghouse conceded that the no-OCI certification was
made in connection with a claim seeking money from the government.
Westinghouse asserted at trial that the no-OCI certification was not false.
However, the jury determined that GPC did have an OCI and that the no-
OCI certification was false. Westinghouse does not challenge the jury’s
finding of falsity on appeal.
4Harrison argued to the district court and now argues on appeal, as an
additional ground to affirm the district court’s judgment, that materiality
is no longer a required element under the FCA. He cites the Supreme
Court’s opinion in Neder v. United States, 527 U.S. 1 (1999), which was
decided less than a month after Harrison I. In a footnote, the Court in
Neder stated that the use of the term "false statement," as opposed to
"fraudulent statement," in a criminal statute does not imply a materiality
requirement. Id. at 23 n.7.
We conclude that Neder does not control whether materiality is a
required element in the context of civil FCA cases. Neder, unlike this
case, involved a wire and bank fraud criminal prosecution. We have pre-
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Because the district court, rather than the jury, decided the issue of
materiality, we review the court’s findings of fact for clear error and
its conclusions of law de novo. Nelson-Salabes, Inc. v. Morningside
Dev., LLC, 284 F.3d 505, 512 (4th Cir. 2002).
The test for determining materiality is "whether the false statement
has a natural tendency to influence agency action or is capable of
influencing agency action." Berge, 104 F.3d at 1460. The question of
materiality is a mixed question of law and fact for the court to decide.
Id.; Harrison I, 176 F.3d at 785.
Westinghouse does not challenge the factual findings underpinning
the district court’s determination that the false certification was mate-
rial. Instead, Westinghouse claims that the district court applied the
wrong standard for determining whether a false statement is material.
The district court concluded that the false statement by Westing-
house — that GPC had no OCI relating to the subcontract — was
material. In making this determination, the district court applied the
standard we established in Berge — whether the false statement had
a natural tendency to influence DOE’s action or was capable of influ-
encing agency action.5 The district court found that, at the least, DOE
viously been reluctant to apply rulings in the criminal context to some
civil causes of action. For instance, the Supreme Court in United States
v. Gaudin, 515 U.S. 506 (1995), held that the issue of materiality in a
criminal false statements statute case must be submitted to the jury. Nev-
ertheless, we specifically declined to apply Gaudin to a civil FCA case
and instead held that the issue of materiality in civil FCA cases is for the
court, rather than the jury, to decide. United States ex rel. Berge v. Board
of Trustees of the Univ. of Ala., 104 F.3d 1453, 1460 (4th Cir. 1997).
We decline to apply to this civil FCA case the Supreme Court’s state-
ment in Neder that criminal statutes containing the phrase "false state-
ment" do not imply a materiality requirement. Instead, we follow our
prior civil FCA precedent in Berge and hold that a plaintiff in a civil
FCA suit must prove that a false statement is material. Berge, 104 F.3d
at 1459.
5In Neder, the Supreme Court referenced § 538 of the Restatement
(Second) of Torts as a test for determining materiality in criminal fraud
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would have had to start the solicitation over or GPC might have been
disqualified from bidding on the training subcontract had DOE known
that GPC had access to procurement sensitive documents not avail-
able to other subcontract bidders.
Westinghouse nevertheless contends that the district court erred in
determining that the no-OCI certification was material because the
false statement did not actually affect the government’s decision to
fund the subcontract, as evidenced by the fact that DOE continued to
fund the subcontract even after it was informed about and investigated
the alleged OCI. We find this argument unpersuasive.
DOE approved awarding the subcontract to GPC in September
1992. In April 1993, Harrison informed DOE officials for the first
time about the OCI issue. After investigating the information pro-
vided by Harrison, DOE determined that GPC did not have an OCI
relating to its work under the subcontract. DOE thereafter continued
to pay all the invoices submitted for the work GPC performed on the
training program.
Westinghouse relies on Berge to support its materiality argument.
In Berge, a graduate student brought an FCA action against a univer-
sity and three of its research professors, asserting that the defendants
made false statements in their annual progress reports seeking contin-
uing funding under a National Institute of Health (NIH) five-year
research grant. The university had received funds from NIH for the
previous ten years for this particular research program. It was
approved to receive five more years of funding (years 11 through 15)
prosecutions. Neder, 527 U.S. at 22 n.5. The test sets out two alternatives
to establish materiality. The first provides that a matter is material if "a
reasonable man would attach importance to its existence or nonexistence
in determining his choice of action in the transaction in question." Id.
The district court used both the Berge materiality test and the above
alternative from Neder in deciding whether the false certification by
Westinghouse was material. Because the Berge test and the first Neder
alternative are similar and because Harrison would prevail under either
test, we need not decide whether the Supreme Court’s materiality test for
criminal fraud cases should govern civil FCA cases.
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as long as it demonstrated adequate progress annually. Berge, 104
F.3d at 1455-56.
Among several other complaints, the graduate student asserted that
the university included her doctoral research in its progress report for
year 12 without crediting her, thereby overstating its competence in
her particular field. The graduate student claimed that the university’s
failure to credit her research constituted a false statement in an
attempt to get a false claim paid. Id. at 1456.
After the graduate student filed her lawsuit, the government’s
Inspector General investigated but found no criminal violations. It
also determined that many of the graduate student’s claims were base-
less or exaggerated. Id.
A jury found in favor of the graduate student, and the district court
assessed a penalty, of which the plaintiff as the qui tam relator was
awarded nearly $500,000. Id. at 1455. We reversed on appeal, finding
that the alleged false statements were not material to NIH’s decision
to renew the university’s research grant. The university had obtained
continuing funding for its ongoing research for nearly a decade before
submitting the funding proposal in question. The graduate student’s
contribution to the grant proposal was not central to the overall proj-
ect, and the university had demonstrated satisfactory progress to war-
rant continued funding even without the graduate student’s research.
Id. at 1462.
Moreover, we decided that the university’s failure to identify the
graduate student as a contributor was not actionable because NIH did
not require the university to include the identity of any of the contrib-
utors to the research. We held that there can be no liability under the
FCA unless the defendant has an obligation to disclose omitted infor-
mation. Id. at 1461. For all of these reasons, we found that the alleged
false statement by the defendant was plainly not material to NIH’s
funding decision. Id. at 1462 ("Assuming arguendo that all of Berge’s
allegations were true and [the university] had made these false state-
ments, it is hard to imagine that NIH’s decision-making would have
been influenced by them.").
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This case is readily distinguishable from Berge. Unlike the univer-
sity in Berge, which was not obligated to name its research contribu-
tors, Westinghouse was required to submit the no-OCI certification to
DOE as a prerequisite to GPC’s being awarded the contract. GPC
would have been disqualified from bidding on the subcontract had it
not provided a no-OCI certification.6 The master contract between
Westinghouse and DOE required Westinghouse to submit no-OCI
certifications to DOE when Westinghouse submits subcontracts for
approval.7 If Westinghouse had not included the no-OCI certification
in its PUR package, DOE would not have approved the GPC subcon-
tract.
Moreover, unlike the insignificant nature of the graduate student’s
research in Berge, the no-OCI certification plays an important role in
the procurement process by ensuring that all government contracts are
bid fairly. Before awarding a subcontract, DOE requires the bidder to
certify, in effect, that its bid was fairly produced and that the other
bidders were not disadvantaged by any wrongful conduct. By passing
on the false certification to DOE, Westinghouse undermined the
integrity of the procurement system.8
6GPC could have complied with this requirement by certifying that it
had a potential OCI that could be mitigated or avoided by segregating the
individuals within the organization who have the conflict. This option of
compliance would not be possible in this case because the individual
with the conflict, Kirkpatrick, had already participated in drafting GPC’s
winning bid.
7The master agreement between Westinghouse and DOE requires
Westinghouse to:
obtain and furnish to the Contracting Officer . . . an OCI Disclo-
sure Statement . . . from all subcontractors to be utilized under
this contract to perform work similar to the services provided by
[Westinghouse]. No work shall be performed by the subcontrac-
tor until the Contracting Officer has cleared the subcontractor for
Organizational Conflicts of Interest (OCI).
J.A. 1920.
8Westinghouse seizes on one footnote in Berge in which we noted that
the graduate student could not account for the fact that NIH repeatedly
probed all of her allegations but, nevertheless, continued to grant funding
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What Westinghouse proposes we do, in effect, is to change the
standard of proof required to establish materiality in an FCA case.
Westinghouse asserts that materiality should depend on "the actual
effect the truth or falsity of a certification has upon the government’s
decision to pay." Supplemental Brief at 6. Under this theory, a gov-
ernment contractor could never be held liable under the FCA if the
governmental entity decides that it should continue to fund the con-
tract, even though it finds that the contractor made a false statement
in connection with a claim. In effect, a court would be bound to find
no materiality whenever a governmental entity investigates an alleged
OCI but decides to continue funding the contract.
We decline to adopt this standard. First, it is inconsistent with
Berge because it focuses on the actual effect of the falsehood when
it is discovered, while the Berge standard hinges on whether a false
statement has a "natural tendency" or is "capable of influencing" a
government funding decision. By clear implication, the Berge stan-
dard focuses on the potential effect of the false statement when it is
made, not on the actual effect of the false statement when it is discov-
ered.
Second, we can foresee instances in which a government entity
might choose to continue funding the contract despite earlier wrong-
doing by the contractor. For example, the contract might be so advan-
tageous to the government that the particular governmental entity
would rather not contest the false statement, even if it became aware
of the false statement before the subcontractor began its work. Also,
the government might decide not to address a conflict of interest that
it first discovers several months after the subcontractor begins work.
At that point, to avoid further costs the government might want the
subcontractor to continue the project rather than terminate the con-
tract and start over.
to the university. See id. at 1462, n.3. In this case, however, Harrison
demonstrated a legitimate explanation for DOE’s failure to detect the
OCI — Westinghouse denied during DOE’s investigation that GPC had
an OCI. Based on the jury’s answers to the interrogatories, it is clear that
the jury, unlike the DOE investigators, disbelieved the denials by Wes-
tinghouse officials.
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Third, the standard proposed by Westinghouse does not accomplish
one of the primary purposes of the FCA — policing the integrity of
the government’s dealings with those to whom it pays money. See
United States v. Maher, 582 F.2d 842, 847-48 (4th Cir. 1978) (noting
that an important purpose of the criminal FCA is to assure the integ-
rity of claims and vouchers submitted to the government). Courts give
effect to the FCA by holding a party liable if the false statement it
makes in an attempt to obtain government funding has a natural ten-
dency to influence or is capable of influencing the government’s
funding decision, not whether it actually influenced the government
not to pay a particular claim.
In this case, the district court correctly ruled that the false certifica-
tion by Westinghouse was material. Contrary to Westinghouse’s sug-
gestion, the no-OCI certification was not an insignificant technical
requirement. Moreover, the particular conflict in question — where
GPC had almost unfettered access to procurement sensitive informa-
tion while the other bidders had none — would inherently make it
probable that DOE would disqualify GPC from bidding on the sub-
contract. Thus, the false statement by Westinghouse — that GPC did
not have an unfair competitive advantage over the other bidders —
had a natural tendency to influence or was capable of influencing
DOE to disqualify GPC from the bidding process. It is hard for us to
imagine that DOE, if it had fully known the details of the OCI, would
have allowed GPC to receive the subcontract.
B.
Westinghouse also contends that it did not have the requisite
scienter to be held liable under the FCA, and, therefore, the district
court should have granted judgment as a matter of law in its favor.
We disagree.
We review the denial of judgment as a matter of law de novo as
to matters decided by a jury. Konkel v. Bob Evans Farms Inc., 165
F.3d 275, 279 (4th Cir. 1999). In doing so, we must view the evidence
in the light most favorable to the prevailing party and draw all reason-
able inferences in that party’s favor to determine whether a reasonable
jury could reach but one conclusion. Winant v. Bostic, 5 F.3d 767,
774 (4th Cir. 1993). Thus, we must determine, viewing the evidence
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in the light most favorable to Harrison, whether the jury could reach
but one conclusion — that Westinghouse did not "knowingly" pass on
GPC’s false no-OCI certification.
The FCA prohibits a person from "knowingly" presenting or mak-
ing a false statement in connection with a claim seeking payments
from the government. See 31 U.S.C. § 3729 (a)(1)-(2). The FCA
defines "knowingly" to mean:
that a person, with respect to information—
(1) has actual knowledge of the information;
(2) acts in deliberate ignorance of the truth or falsity of the
information; or
(3) acts in reckless disregard of the truth or falsity of the
information,
and no proof of specific intent to defraud is required.
31 U.S.C. § 3729(b).
The district court instructed the jury that:
in order to find that WSRC took any action knowingly, you
must find that at least one individual employee had all of the
relevant factual information to satisfy that standard as to the
fact or action at issue. In this particular case, that means that
you would need to find that at least one individual employee
of WSRC knew that GPC was submitting a bid on the sub-
contract, and knew of facts which would have required dis-
closure of an organizational conflict of interest by GPC.
You do not need to consider whether this individual knew
that a certification would be required or what information
GPC was actually disclosing on it.
J.A. 1019. In answering the interrogatories, the jury found that Wes-
tinghouse knowingly submitted the false no-OCI certification to
DOE.
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Westinghouse argues that the district court’s jury instruction was
impermissibly broad. Westinghouse complains that the instruction
improperly allowed the jury to piece together knowledge of more than
one of its employees to find that the corporation knowingly made a
false statement. It asserts that it is entitled to judgment as a matter of
law because there is no evidence that any one particular Westing-
house employee knew of the OCI and also knew that Westinghouse
was required to and did submit the false no-OCI certification to the
DOE. According to Westinghouse, there is no evidence that Bowers,
the Westinghouse official who submitted the no-OCI certification to
DOE, knew of any potential OCI and no evidence that Smith, who
presumably knew of the OCI, knew that Westinghouse submitted a
no-OCI certification to DOE. Thus, Westinghouse contends there was
no "single actor" at Westinghouse who possessed the requisite
scienter for FCA liability to attach.9
9Harrison and the government contend, as an additional ground to
affirm, that the district court improperly instructed the jury on the issue
of scienter, albeit for a much different reason than the one advanced by
Westinghouse. Instead of the "single actor" instruction urged by Wes-
tinghouse, Harrison and the government argue that the district court
should have instructed the jury that it could piece together the "collective
knowledge" of all of the involved Westinghouse employees to find the
requisite knowledge.
We note that this case is not a "collective knowledge" case, as Harri-
son and the government define the term. Under their "collective knowl-
edge" approach, "knowledge [of a corporation] is the sum of the
knowledge of all of the employees. That is, the [corporation’s] knowl-
edge is the totality of what all of the employees know within the scope
of their employment." United States v. Bank of New England, 821 F.2d
844, 855 (1st Cir. 1987).
This "collective knowledge" doctrine would allow a plaintiff to prove
scienter by piecing together scraps of "innocent" knowledge held by vari-
ous corporate officials, even if those officials never had contact with
each other or knew what others were doing in connection with a claim
seeking government funds. For instance, this case would be a "collective
knowledge" case if Smith knew only that GPC had received procurement
sensitive information about the ITP training subcontract. This knowledge
would be completely "innocent" if Smith did not also know that GPC
was submitting a bid to obtain the subcontract. Nevertheless, under the
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We decline to adopt Westinghouse’s "single actor" requirement in
this false certification case. In particular, we decline to adopt Wes-
tinghouse’s view that a single employee must know both the wrongful
conduct and the certification requirement. If we established such a
rule, corporations would establish segregated "certifying" offices that
did nothing more than execute government contract certifications,
thereby immunizing themselves against FCA liability.
Instead, we conclude that the district court’s instruction was not
impermissibly broad as to the scienter required to find liability under
the FCA. The district court’s instruction appropriately focused on the
issue of material importance, i.e., whether there was at least one Wes-
tinghouse employee who knew or should have known that GPC was
submitting a bid seeking government funds and that this bid was
tainted by an OCI.
Viewing the evidence in the light most favorable to Harrison, we
find there was sufficient evidence for the jury to decide that Westing-
house, through Smith alone, knew that GPC was bidding on the ITP
training program and knew that GPC had an OCI relating to its bid.
It is undisputed that Smith knew that GPC was submitting a bid on
the ITP training program subcontract. Smith was one of the three
"collective knowledge" doctrine, Westinghouse could be held liable
under this scenario if the plaintiff could also prove that some other Wes-
tinghouse official, who knew nothing about the OCI, knew that GPC was
submitting a bid and yet another employee, who knew nothing about the
OCI, knew only that Westinghouse was submitting a no-OCI certifica-
tion.
We need not adopt the "collective knowledge" doctrine as Harrison
and the government espouse it to affirm in this case because we are not
cobbling together pieces of "innocent" knowledge to find the requisite
scienter. The charge required the jury to find at least one Westinghouse
employee who knew of the wrongful conduct (i.e., that GPC had an OCI
and was submitting a tainted bid seeking government funds) that gave
rise to the false statement. Because Smith alone knew all the facts that
made the OCI certification false, his knowledge can be combined with
the undisputed fact that Bowers submitted the no-OCI certification on
behalf of Westinghouse to establish scienter.
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Westinghouse employees who graded the GPC bid before it was sub-
mitted to DOE. The three graders reached a consensus that the GPC
bid was substantially better than all the other bids submitted. The evi-
dence also shows that Bowers, the Westinghouse procurement spe-
cialist on the ITP training project, cautioned Smith to ensure that no
contract employees, like Kirkpatrick of GPC, would have access to
procurement sensitive information. Frank, another Westinghouse
employee, witnessed Kirkpatrick having unrestricted access to and
preparing procurement sensitive documents. Frank cautioned Smith
before the subcontract was awarded to GPC that Kirkpatrick had
access to sensitive information and that GPC would thereby have a
competitive advantage over other firms bidding on the ITP training sub-
contract.10 Although Smith denied that Kirkpatrick had access to pro-
curement sensitive information, Smith testified that he knew that an
OCI would exist if GPC had access to procurement sensitive informa-
tion during the solicitation process. Thus, there was ample evidence
for the jury to find that Smith knew of facts that made the no-OCI cer-
tification false before Westinghouse submitted the no-OCI certifica-
tion to DOE.
Therefore, we conclude there was sufficient evidence for the jury
to find that Westinghouse possessed the requisite scienter to be held
liable under the FCA. Westinghouse concedes that Bowers knew that
the no-OCI certification was included in the PUR package Westing-
house submitted to DOE. Moreover, regardless of whether Smith
knew specifically that Westinghouse was submitting the no-OCI certi-
fication to DOE, Westinghouse knew, through Smith alone,11 that the
substance of the no-OCI certification was false when Westinghouse
submitted it to DOE.12
10Although both sides disputed when this conversation could have
occurred, there was sufficient evidence for the jury to decide that Frank
confronted Smith before the subcontract was awarded to GPC.
11Westinghouse concedes that whatever knowledge its employees pos-
sessed relating to the facts of this case are imputed to it. As such, what-
ever knowledge Smith possessed is imputed to Westinghouse. This is
particularly appropriate in this case, because Westinghouse had a specific
contractual obligation to obtain no-OCI certifications from its subcon-
tractors.
12Our conclusion is consistent with the Eleventh Circuit’s opinion in
Grand Union Co. v. United States, 696 F.2d 888 (11th Cir. 1983), that
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In the alternative, Westinghouse contends that, even if it is liable
for the false statement it passed on to DOE in the PUR package, it did
not have the requisite scienter relating to the nineteen invoices it sub-
mitted to DOE after April 20, 1993, when Harrison first informed
DOE about the OCI.
After DOE approved the PUR package, Westinghouse ultimately
submitted twenty-five invoices seeking payment for the work per-
formed by GPC under the subcontract. Westinghouse argues that it
cannot be held liable for the nineteen invoices submitted after April
20, 1993, because DOE was already aware of GPC’s potential conflict
of interest by then but continued to pay the invoices. It contends that
DOE’s knowledge of the potential OCI negated any scienter that
Westinghouse may have had prior to April 20. We disagree.
Westinghouse took the position throughout the funding of the train-
ing program (and still does) that it had no OCI with GPC. The DOE
officials who investigated Harrison’s charges determined that no OCI
existed. They based this determination, at least in part, on their inter-
views with Westinghouse employees who denied that an OCI existed.
This evidence demonstrates that when Westinghouse submitted its
initial PUR package and all of the twenty-five subsequent invoices,
it intended for DOE to believe (which it did) that no OCI existed.
a corporation can be held liable under the FCA even if the certifying
employee was unaware of the wrongful conduct of other employees. In
Grand Union, a grocery store was accused of allowing its patrons to pur-
chase ineligible items with food stamps. The check-out cashiers accepted
the stamps for ineligible items and turned them over to the head cashier.
The head cashier endorsed the stamps and certified that they were not
accepted for ineligible items. The government, in turn, redeemed the
stamps. Id. at 889.
The grocery store, much like Westinghouse in this case, argued that it
could not be held liable under the FCA because there was no evidence
that the certifying clerk knew about the improper transactions. The Elev-
enth Circuit disagreed, finding that there was sufficient evidence support-
ing the inference that the check-out cashiers knowingly permitted the
transactions and that their knowledge could be imputed to the grocery
store. Id. at 890-91.
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Thus, the initial false certification by Westinghouse in the PUR pack-
age tainted all of the following invoices, and the district court prop-
erly determined that Westinghouse could be held liable on all twenty-
six13 of the submissions by Westinghouse seeking government fund-
ing.14
13The district court’s ruling is consistent with our statement in Harri-
son I that, as alleged, "[e]ach claim for payment under the contract was
. . . submitted under a contract which was fraudulently approved. So,
WSRC could face False Claims Act liability for each claim for payment
under the GPC subcontract." Harrison I, 176 F.3d at 793-94.
14Westinghouse cites our recent opinion in United States ex rel. Becker
v. Westinghouse Savannah River Co., 305 F.3d 284, 289 (4th Cir. 2002),
for the proposition that "prior government knowledge of an allegedly
false claim can negate the scienter required for an FCA violation." The
facts of Becker are substantially different from the facts in this case. The
plaintiff in Becker claimed that Westinghouse spent government funds
for an unauthorized purpose and then attempted to conceal the expendi-
ture by creating false documents. The facts, however, showed that Wes-
tinghouse had constructed buildings at the Savannah River Site under
budget, creating a $12 million surplus. DOE, because it had undergone
a budgetary reorganization, directed Westinghouse to move the surplus
money from the building construction account to a different kind of
account and to use the money for different purposes. Westinghouse com-
plied with the DOE instructions and began drawing money from the new
account for projects other than building construction. Id. at 286-87.
The district court granted summary judgment in favor of Westing-
house, and we affirmed. We held that Westinghouse lacked the requisite
knowledge of making false records in an attempt to conceal using the
money for unauthorized projects. We found it important that DOE had
"full knowledge of the material facts" relating to transferring the surplus
money from one account to another. Id. at 289. We refused to hold Wes-
tinghouse liable for following DOE directions.
Our holding in Becker does not help Westinghouse in this case. Unlike
in Becker, DOE did not have "full knowledge" of the material facts. Har-
rison presented his allegations to DOE, but DOE found (contrary to what
the jury found at trial) that no OCI existed. Moreover, unlike in Becker,
Westinghouse clearly was not following DOE directions when it allowed
Kirkpatrick to have unrestricted access to procurement sensitive informa-
tion.
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Westinghouse also asserts that the jury could not have reasonably
found that it had the requisite scienter because Westinghouse did not
have any financial motive to favor GPC. In establishing liability
under the FCA, a plaintiff need not prove the defendant had a finan-
cial motive to make a false statement relating to a claim seeking gov-
ernment funds. See Harrison I, 176 F.3d at 788 (establishing four
elements in a FCA claim, none of which requires a financial motive).
C.
Westinghouse also argues that Harrison improperly raised new
allegations of fraud for the first time during trial. Westinghouse
claims that Harrison was prohibited from raising these new allega-
tions at trial because Fed. R. Civ. P. 9(b) requires a plaintiff to allege
fraud with particularity, and the district court erred in instructing the
jury on allegations that Harrison did not specifically plead in his com-
plaint. We disagree.
Rule 9(b) provides: "In all averments of fraud or mistake, the cir-
cumstances constituting fraud or mistake shall be stated with particu-
larity. Malice, intent, knowledge, and other condition of mind of a
person may be averred generally." As we explained in Harrison I,
Rule 9(b) has four purposes:
First, the rule ensures that the defendant has sufficient infor-
mation to formulate a defense by putting it on notice of the
conduct complained of . . . . Second, Rule 9(b) exists to pro-
tect defendants from frivolous suits. A third reason for the
rule is to eliminate fraud actions in which all the facts are
learned after discovery. Finally, Rule 9(b) protects defen-
dants from harm to their goodwill and reputation.
Harrison I, 176 F.3d at 784 (quoting United States ex rel. Stinson,
Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Geor-
gia, Inc., 755 F.Supp. 1055, 1056-57 (S.D. Ga. 1990)). We also noted
that a "court should hesitate to dismiss a complaint under Rule 9(b)
if the court is satisfied (1) that the defendant has been made aware of
the particular circumstances for which [it] will have to prepare a
defense at trial, and (2) that plaintiff has substantial prediscovery evi-
dence of those facts." Id.
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Harrison’s amended complaint, filed after Harrison I, contains the
following allegations relevant to the OCI claim:
(1) GPC requested and received insider information from
Smith that was not provided to other bidders in viola-
tion of DOE regulations;
(2) Westinghouse misrepresented to DOE that its requisi-
tion process had been duly followed when Westing-
house knew that such representation was false because
GPC had received insider information during the pro-
curement process;
(3) Westinghouse was required under DOE regulations to
obtain from GPC a certification relating to OCIs;
(4) Westinghouse knowingly permitted GPC to engage in
undisclosed OCIs that gave GPC a competitive advan-
tage; and
(5) Westinghouse knew about GPC’s OCI, which gave
GPC a competitive advantage over the other bidders,
but failed to disclose the OCI to DOE when it submit-
ted GPC’s false no-OCI certification to DOE.
We find that Harrison’s Recast Complaint gave Westinghouse
notice of the particular facts and circumstances of the misconduct by
Westinghouse that Harrison ultimately proved at trial. We further find
that Harrison had pre-discovery evidence of these facts. As a vice-
president of GPC, Harrison was the corporate officer responsible for
giving final approval to the bid (which included the no-OCI certifica-
tion) that GPC submitted to Westinghouse. Harrison refused to
approve the document because he believed that GPC had obtained
insider information and that the OCI should be disclosed. Thus, we
conclude the district court properly denied Westinghouse’s motion for
judgment as a matter of law relating to any Rule 9(b) violation.
IV.
In his cross-appeal, Harrison argues that the district court erred by
improperly limiting damages, by not awarding him personal expenses,
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and by not allowing him to recover the full amount of attorneys fees
requested.
A.
Harrison first argues that the district court erred by ruling that he
could not seek disgorgement of all monies paid by DOE to Westing-
house as damages. He claims that the subcontract was void ab initio
because of the fraud perpetrated by Westinghouse and, therefore, the
$9 million that DOE ultimately paid for the work GPC performed
under the subcontract should be disgorged.
The district court ruled that Harrison failed to prove any actual
damages suffered by the government because there was no evidence
that it cost the government more to have GPC perform the subcontract
than any other firm.15 Harrison does not dispute this finding on
appeal.
We have not adopted one particular standard by which damages
should be measured under the FCA. Some courts measure damages
by the amount of money the government paid by reason of the false
statement above what it would have paid absent the false statement.
See, e.g., United States v. Ekelman & Assocs., 532 F.2d 545, 550 (6th
Cir. 1976). We suggested this measure of damages in Harrison I
when we noted that the plaintiff had sufficiently alleged that the false
statements made by Westinghouse "caused the government to pay
‘claims’ at a higher cost than it would have paid absent the fraud."
176 F.3d at 794. This view is consistent with the text of the FCA,
which provides for recovery of "damages which the Government sus-
tains because of the act of" the defendant. 31 U.S.C. § 3729(a). This
approach also furthers an important purpose of the FCA, which is to
make the government completely whole. United States ex rel. Marcus
v. Hess, 317 U.S. 537, 551-52 (1943).
15The record reveals that a bid from another firm was lower than
GPC’s bid. This lower bid scored "grossly deficient" in the initial techni-
cal review, however, and was not considered a viable candidate. Harrison
does not argue that this other firm could or should have been awarded
the subcontract.
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We conclude that, under the particular facts of this case, the district
court properly required the plaintiff to prove damages by showing
how much more the government paid GPC to perform the subcontract
than it would have paid another firm absent the false no-OCI certifi-
cation. Although Westinghouse ran afoul of the fair bidding require-
ments, there was no evidence adduced at trial suggesting that GPC
failed to perform the work that it was required to perform under the
subcontract or that the government did not receive the benefit of the
work performed.16 Harrison presented no evidence that the govern-
ment did not get what it paid for or that another firm could have per-
formed the work for less. As such, the district court correctly
disallowed Harrison from recovering disgorgement of all $9 million
that the government paid for the subcontracted work.17
Harrison also argues that the fraudulent conduct by Westinghouse
made quantifying damages virtually impossible. According to Harri-
son, the district court should have placed on Westinghouse the burden
of proving the added costs DOE would have incurred absent the false
statement.
We decline to shift the burden of proof on damages as Harrison
proposes. The FCA specifically places the burden of proving damages
on the government. 31 U.S.C. § 3731(c). Because Harrison, as the qui
tam relator, stands in the place of the government, he must assume the
government’s burden of proof as to damages in an FCA case.
B.
Harrison next argues that the district court erred in denying his
claim for personal litigation expenses. He claimed $786 for travel
16Harrison asserts that DOE scrapped the ITP project shortly after it
was put on line and that the ITP training program was, therefore, a waste.
This circumstance, however, does not mean that GPC’s work under the
subcontract lacked value. GPC performed the work it was required to
perform under the subcontract.
17Other factual scenarios could exist in which the contractor’s perfor-
mance so lacks any value as to make recovery of all monies paid by the
government an appropriate remedy. See, e.g., United States v. TDC
Mgmt. Corp., 288 F.3d 421, 428 (D.C. Cir. 2002).
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expenses and $3,250 for time away from his business. The district
court ruled that FCA does not provide for personal litigation
expenses.
We generally review the denial of fees and costs for an abuse of
discretion. Hitachi Credit Am. Corp. v. Signet Bank, 166 F.3d 614,
631 (4th Cir. 1999). The FCA provides that a prevailing qui tam rela-
tor shall receive, in addition to up to 30% of the proceeds of the
action, "an amount for reasonable expenses which the court finds to
have been necessarily incurred, plus reasonable attorneys’ fees and
costs." 31 U.S.C. § 3730(d)(2). Harrison argues that these "expenses"
should include his personal expenses incurred as a result of the litiga-
tion.
In other contexts, we have limited "expenses" or "costs" to direct
costs of litigation, such as court costs, deposition transcriptions, pho-
tocopying, and other compensable expenses that an attorney charges
her client. Cherry v. Champion Int’l. Corp., 186 F.3d 442, 449 (4th
Cir. 1999); Daly v. Hill, 790 F.2d 1071, 1084 (4th Cir. 1986). Harri-
son cites no authority allowing reimbursement for the type of personal
expenses he now seeks. We find that the district court did not abuse
its discretion in denying Harrison’s claim for personal expenses.
C.
Finally, Harrison argues that the district court erred in not awarding
all of his claimed attorney fees. Although Harrison sought more than
$300,000 in attorney fees, the district court only awarded just over
$144,000. We review a denial of attorney fees for abuse of discretion.
Hitachi Credit Am. Corp., 166 F.3d at 631.
In determining the award, the district court segregated the request
into three time phases: (1) initiation of suit through Harrison I; (2)
Harrison I through granting judgment as a matter of law on the low-
ball claim in favor of Westinghouse; and (3) judgment as a matter of
law on the low-ball claim through judgment for Harrison on the OCI
claim.
In the first phase, we affirmed the dismissal of eight of Harrison’s
ten claims. The district court reduced Harrison’s fee request during
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this phase by 60%. In the second phase, Westinghouse prevailed on
the low-ball claim, the much more significant of the two remaining
claims. The district court reduced Harrison’s fee by 50% for that
phase. In the final phase, Harrison prevailed on the OCI claim. The
district court awarded all of the requested fees for that phase.
We conclude that the district court reasonably reduced the
requested fees. We find no abuse of discretion.
V.
For the foregoing reasons, we affirm the judgment of the district
court.
AFFIRMED
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