U.S. ex rel. v. JD Eckman: Court Dismisses FCA Claim Over Bridge Project Billing

JD Eckman, Inc., a Pennsylvania construction company, performed work on several federally funded highway projects subject to the Davis-Bacon Act (DBA). The DBA requires contractors and subcontractors to pay laborers and mechanics prevailing wages and fringe benefits as determined by the U.S. Department of Labor (DOL) for similar work in the area. The projects in question involved contracts administered by the Pennsylvania Department of Transportation (PennDOT) and funded in part by the Federal Highway Administration.

Between 2012 and 2018, JD Eckman submitted certified payroll reports to PennDOT certifying compliance with the DBA’s prevailing wage requirements. A former employee, serving as a relator under the False Claims Act (FCA), later alleged that the company falsified its payroll records to conceal underpayment of workers. The relator claimed that JD Eckman misclassified certain employees as operating engineers when they were performing work covered under higher-paying classifications such as mechanics or electricians. He further alleged that the company deducted unauthorized costs from employee paychecks, including charges for safety equipment and tools, and failed to pay overtime properly.

Procedural History

In 2020, the relator filed a qui tam action in the U.S. District Court for the Eastern District of Pennsylvania under the False Claims Act. The United States declined to intervene, and the relator proceeded independently. JD Eckman moved to dismiss the complaint, arguing that the alleged violations fell exclusively under the DBA’s administrative enforcement scheme and could not support an FCA claim.

District Court Analysis

The court reviewed whether alleged misclassifications and underpayments under the DBA could form the basis for FCA liability. It noted that the DBA itself does not contain a private right of action and provides an administrative process through which the DOL investigates and enforces prevailing wage compliance. Under this framework, the DOL may withhold contract funds, require restitution to employees, or debar contractors for willful violations.

The relator argued that JD Eckman’s submission of false payroll certifications to PennDOT constituted false claims for payment to the federal government because they represented compliance with prevailing wage requirements. The court acknowledged that an FCA claim can, in some instances, arise from false certifications tied to federal funding. However, it found that the relator’s allegations merely restated potential DBA violations without showing material falsity or knowledge of fraud directed at the federal government.

Application of Legal Standards

To state a claim under the FCA, a relator must allege that (1) the defendant presented a false or fraudulent claim for payment, (2) the falsehood was material to the government’s payment decision, and (3) the defendant acted knowingly. The court found the complaint deficient on all three elements. It held that while JD Eckman’s payroll certifications were submitted to PennDOT, not directly to the federal government, the relator failed to allege facts demonstrating that the misclassifications or deductions were material to federal payments. The court further concluded that the complaint lacked sufficient detail to support an inference that JD Eckman knowingly submitted false claims.

The court emphasized that the DBA’s enforcement structure reflects Congress’s intent to rely on DOL oversight rather than private litigation for resolving prevailing wage disputes. Allowing FCA claims based solely on alleged DBA noncompliance would, in the court’s view, improperly expand federal jurisdiction and undermine the administrative process.

Court’s Ruling

The District Court granted JD Eckman’s motion to dismiss, finding that the relator failed to state a viable claim under the False Claims Act. The court held that alleged misclassifications and underpayments under the Davis-Bacon Act fall within the DOL’s exclusive administrative enforcement authority and cannot, without more, serve as the basis for FCA liability. The case was dismissed without prejudice, allowing the relator the opportunity to amend the complaint if additional facts could support a claim of material fraud.

Assistance with Davis-Bacon Act Matters

If you are facing issues related to prevailing wage compliance or government contract disputes, Whitcomb, Selinsky PC assists with matters involving the Davis-Bacon Act. Contact our team to learn how we can help ensure compliance and address disputes involving federally funded construction projects.