Two contracting firms were named as working in conjunction with two large surety bonding companies, Hudson Insurance Company and Hanover Insurance Company, to qualify for $12.5 million in SDVOSB set-aside contracts from the Veteran Administration (VA).
In a second opinion filed in July 2017, the U.S. District Court extended federal FCA liability to bonding companies who have reason to know that they bonded construction firms who falsified their SDVOSB status. This has been described as a is a stunning reversal.
A ‘stunning’ reversal
Scollick’s qui tam whistleblower lawsuit expanded the scope of FCA liability by establishing the legal precedent that bonding companies can be held liable for triple the damages for issuing surety bonds to construction companies that falsely claim SDVOSB status.
Scollick’s attorney, Michael Kohn, has noted that the surety bond provided to the contractors should guarantee material terms of work. And in the Narula case, the sureties knew from the outset that contract terms would not be carried out.
