Court Finds Liability Under False Claims Act
A federal appellate court recently ruled that a government contractor could be held liable under the False Claims Act (FCA) for knowingly or recklessly failing to comply with its VETS-100 reporting obligations. The practical significance of this decision is that if employees of government contractors submit inaccurate VETS-100 reports or neglect to file the reports altogether, liability may exist under the FCA. Kirk v. Schindler Elevator Corp., No. 09-1678-cv, Second Circuit Court of Appeals (April 6, 2010).

Daniel Kirk, a Vietnam veteran, worked as a management-level employee for a predecessor of Schindler Elevator Corp. When Schindler merged with Kirk’s employer, the reorganization left Kirk in a non-managerial position, from which he promptly resigned. Kirk then filed a lawsuit in federal court, claiming that Schindler Elevator defrauded the government by failing to comply with the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA). VEVRAA requires that federal contractors submit VETS-100 reports, which provide information on the number of veterans employed by the contractor.

The Second Circuit Court of Appeals found that the facts as alleged by Kirk showed that Schindler Elevator had no mechanism in place to identify veterans covered by VEVRAA. Thus, the company had knowingly supplied a false record, the court held, because it had nothing upon which to base the information in its VETS-100 reports. As a result, the court reinstated Kirk’s lawsuit .

Note: This article was published in the July/August 2010 issue of The Employment Law Authority.

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