Blackwater successor Academi in hot water for falsifying firearm qualifications

Blackwater successor Academi asked a Virginia federal judge on Thursday to toss a False Claims Act suit accusing it of falsifying firearms qualifications for U.S. Department of State guards in Afghanistan, arguing that the claims don’t hold up under the U.S. Supreme Court‘s recent Escobar decision.

In a reply in support of its motion for judgment on the pleadings, Academi pointed to the Supreme Court’s ruling this year in Universal Health Services Inc. v. Escobar, which noted that the FCA requires that violations be “material,” defined by the statute as something “capable of influencing” government payment decisions. Under this standard, former marksmen Lyle Beauchamp and Warren Shepherd have failed to allege that the government would, or likely would, have withheld payment had it known of Academi’s “supposed noncompliance,” according to the company.

“Never once in their complaint or in their brief do the relators ever allege — let alone allege with plausibility and particularity — that the government actually or likely would have refused to pay Academi had it known of the alleged misrepresentations,” Academi said. “The absence of such alleged facts by itself mandates that the relators’ claims be dismissed under Rule 8 and Rule 9(b) for failing to plead materiality as required by Escobar.”

According to Academi, the former marksmen had contended that even if one of their causes of action under the FCA failed under Escobar, their other claims still had standing. But Academi said Escobar dooms them all, noting that a common requirement for FCA claims is that the alleged falsehood must be “material.”

William Copley, a Weisbrod Matteis & Copley PLLC attorney representing the marksmen, told Law360 on Friday that “Academi’s motion is a late-stage Hail Mary that indefensibly misreads the Supreme Court’s recent decision in Escobar as a significant retraction of the scope of the False Claims Act, and misrepresents the allegations in the complaint.”

Copley added, “No other court has adopted Academi’s misreading of Escobar, and we do not expect the district court in this case to be the first.”

Counsel for Academi did not respond Friday to a request for comment.

The same day Academi moved for a win, Beauchamp and Shepherd slammed the company for adding 46 witnesses to its original list of nine shortly before the close of discovery, calling the untimely disclosure an attempt at “trial by ambush.”

In addition to asking the court to block Academi’s newly disclosed witnesses from testifying at trial, the relators hit back at the company for failing to authenticate thousands of its business records, which include invoices and vouchers from the State Department.

The case has had ongoing discovery disputes, including when the court in September said fellow State Department contractor Triple Canopy Inc. will have to comply with a third-party subpoena after a magistrate judge refused to let the security contractor off the hook.

Since winning expanded discovery on the FCA allegations in the summer, the former marksmen have pushed for more documents from third parties, such as Triple Canopy. Triple Canopy and Academi have both pushed back on requests for firearms training scorecards, and Triple Canopy had filed a motion to quash the document requests, claiming that they run too far afield from the actual issues in the case.

The men filed their initial complaint against what had been known as Xe Services LLC in April 2011, accusing their former employer of lying about the work duties of employees for billing purposes, charging the State Department for work performed by contractors who had been disqualified by failed drug tests and billing for unqualified shooters.

U.S. District Judge T.S. Ellis III dismissed their case in March 2013 because their second amended complaint, filed in November 2012, came after a news report the previous July publicly revealed the accusations. The government declined to intervene in the case, and the allegations were also investigated by the State Department’s Office of Inspector General.

The whistleblowers then appealed to revive the weapons qualification allegations in their suit, which contended that they were unqualified to use the M249 and M240 belt-fed machine guns they were required to know how to use and that their weapons certifications had been falsified. Academi’s U.S. Training Center Inc. had routinely falsified the weapons certifications, the men claimed.

The Fourth Circuit revived their suit in February, finding that the former contractors’ claims preceded any public disclosure of the allegations by more than a year.