Federal Agency Litigation

Overview

As companies seek wider markets for their products and services by offering them online, they become increasingly vulnerable to claims which challenge the veracity of their advertising or the integrity of their processes. When a company faces claims like false advertising, deceptive loan practices or insider trading, the impact of a government investigation can be devastating:  business can come to a complete standstill under a temporary restraining order or preliminary injunction,  assets can be seized, and a receiver may be appointed.

Rooted firmly in the nation’s Capital with strong relationships and credibility across many branches of government, the team at Ifrah Law has deep experience defending companies in ligation with federal agencies. We represent clients on cutting edge issues arising from the intersection of internet business, finance and technology, defending against claims by the Securities & Exchange Commission (SEC), the Federal Trade Commission (FTC), the Food & Drug Administration (FDA), the Commodities Futures Trading Commission (CFTC), and the Consumer Financial Protection Bureau (CFPB).

We have a strong track record of trying and winning cases, and otherwise successfully concluding matters with these agencies so that our clients can get back to business. We also assist in responding to investigations, requests for information, and government subpoenas. Additionally, Ifrah attorneys counsel clients on compliance with these agencies’ ever-evolving regulations in the areas of online advertising, cybersecurity and consumer protection.

Ifrah Law has handled a number of high-profile FTC and CFTC investigations and enforcement actions involving internet marketing campaigns and related issues such as the scientific substantiation of advertising claims.

In one highly publicized matter against a regulatory agency, Ifrah Law succeeded in convincing a jury to completely reject the government’s claims of fraud in one of the very few SEC compliance cases that actually proceeded to trial. In another high profile litigation, we represented international financial clients against federal claims by the SEC and the CFTC regarding the trading of binary options contracts, resulting in a satisfactory global settlement.

Case Studies

Defending a Healthcare Provider Against Claims of Fraud

Our client, a prominent anesthesiologist, employed a medical services billing specialist to submit insurance claims for his practice and surgery center. The terms of the specialist’s contract stated that she would receive 18% of each claim she filed using a specific step-by-step submission and follow-up process.

After the billing specialist was terminated for not following the established submission procedures, she sued the doctor to retain her full commission on outstanding claims she had worked on prior to her dismissal, including those that hadn’t yet been paid. In addition to this contract dispute, she also accused our client and his surgery center of fraud, alleging that they funneled money into a “secret account” to avoid paying her commission under the contract.

Although there was very little basis for the fraud claim, the court allowed it to move forward.  Jeff understood the importance of attempting a settlement on the contract claim, so he analyzed the agreement and claims reports and devised a methodology for valuing the claim. When the plaintiff refused to settle, Jeff and the client pursued mediation with confidence, understanding both the fair value of the case and specific details of the parties’ contract. During mediation, the plaintiff’s side raised several arguments that demonstrated their lack of familiarity with the contract.  Jeff’s thorough understanding of certain provisions allowed the defendant to quickly address and dismiss the arguments.  As a result, the plaintiff ended up settling for much less than she originally claimed.

While the settlement terms are confidential, our client was thrilled with the final result, not only with the amount and the dismissal of the fraud claims, but also in terms of how well the matter was handled.

Defense of Retaliatory Discharge Case Results in Precedent-Setting Ruling

Ifrah’s defense of its clients, Torres Advanced Enterprise Solutions LLC (“TAES”) and Scott Torres, who were charged in a retaliatory discharge case, not only turned out to be a victory for the defendants, but it was also a resounding victory for employers and the court system. The ruling, made in the United States District Court for the District of Columbia, set important precedent regarding federal pre-emption in worker’s compensation issues overseas and retaliatory discharge charges.

Two former employees of Ifrah’s clients claimed that they were improperly discharged in retaliation for filing a workers’ compensation claim under the Defense Base Act (“DBA”) and Longshore and Harbor Workers Compensation Act. They were working for TAES at Forward Operating Base Shield in Iraq when they were discharged.

Ifrah argued that the DBA provided the exclusive remedy for the plaintiffs’ causes of action and otherwise preempted their case. In a 26-page opinion, the judge dismissed all four counts of the First-Amended Complaint, agreeing with Ifrah’s argument. She further held that plaintiffs’ remaining common-law causes of action, including breach of contract, were preempted under the DBA. Specifically, she noted in her opinion that federal courts across the country have found that the DBA expressly preempts other remedies state law affords to similarly-situated plaintiffs. Accordingly, the doctrine of conflict preemption barred plaintiffs’ common-law claims and mandated their dismissal.

Despite the lack of clear precedent on the issue, the opinion clearly establishes as the law of Washington, D.C. that employees subject to a federal workers’ compensation plan must exhaust their administrative remedies first before filing an action in court. The decision will result in the saving of time and expenses related to litigating complex retaliatory discharge claims that can otherwise be resolved more efficiently in the administrative context.

(Sickle et al v. TorresAdvanced Enterprise Solutions, LLC et al., Case No. 1:11-cv-02224 (U.S. District Court, District of Columbia))

Prevailing in a Government Contractor’s Debarment Proceeding

How long should your past haunt you? A client of Ifrah Law faced that question when it was confronted with a potentially crippling debarment from a federal agency.

The government contractor had participated in a conspiracy to bribe a public official for a contract award. However, it was the first to cooperate in the resulting federal investigation, which led to a successful conviction. Fast forward four years, and the Department of Defense moved to debar our client. The DoD had already placed the contractor on the Excluded Parties List System (EPLS) but wanted to go a step further. Debarment would have been devastating for our client’s business, resulting in an almost complete loss of revenue.

Presenting the client’s strong performance record since the bribery incident (we even got the prosecutor from the contract bribery case to write a letter to the court on our client’s behalf), Ifrah Lawyers successfully represented the contractor in the debarment proceeding. We obtained a decision of no debarment period at all.

Protesting Procurement Irregularities to Keep a Client in Competition

A client contractor participated in a procurement competition over a multi-award contract with the Department of the Army that was valued at almost half a billion dollars. After submitting a proposal, our client (along with other bidders) was excluded from the competition because of a deficiency in a proposed labor rate. The other excluded parties protested to the Government Accountability Office, and the Army permitted five of the protesting parties to rejoin the bidding process.

With just a week left before the final proposal revisions were due, our client asked us for help. We filed a U.S. Court of Federal Claims protest asking to reverse the exclusion based on irregularities in the procurement process. We also asked for an injunction to prevent the bidding process from ending.

As a result of our filing and subsequent negotiations with the Department of Justice, our client was permitted to rejoin the bidding and to submit a revised bid.

(Platinum Business Corporation, et al. v. United States, 1:12-cv-00001, Court of Federal Claims, Bid Protest (2012))

Successful Challenge to Denial of Top Secret Security Clearance

A renewal for a Top Secret security clearance became career threatening for an Ifrah client’s CFO when the renewal application was denied due to foreign influences concerns. As the CFO of a defense contractor whose continued employment was a condition for the company’s line of credit, maintaining a security clearance was critical for both the CFO and the company. After the Statement of Reasons was issued, the CFO submitted his own letter challenging the decision but it was denied. The CFO then retained Ifrah Law who, on behalf of the client, drafted a written response and successfully mitigated the security concerns. This resulted in the withdrawal of the Statement of Reason and the ultimate renewal of the CFO’s security clearance.

Successfully Defending a Government Contractor Against a Terminated Employee’s Health Care Claim

Ifrah Law successfully defended a government contractor against claims by a terminated company employee. Our client, a health care professional supplier, faced allegations that it failed to offer the former employee COBRA insurance coverage, as required under the COBRA statute.

Ifrah Law conducted a bench trial in the U.S. District Court for the Eastern District of Virginia in January 2012. The judge sustained minimal claims and awarded the plaintiff a mere $500.

(Middlebrooks v. Godwin Corporation, U.S. District Court, Eastern District of Virginia, No. 1:10CV1306))

Successfully Obtaining a Preliminary Injunction at the Court of Federal Claims

Our client, a long-time government contractor, rightly turned to Ifrah Law when it suspected a competitor had violated FAR regulations. Our client submitted a proposal in response to a government RFP to provide seminars and library services to detainees at the U.S. Naval Station Guantanamo Bay. The RFP stated that this would be a “lowest price technically available” (LPTA) contract.

Our client’s proposal was unsuccessful, and they moved to challenge the award. Our critical review of the record revealed that the successful bidder may have utilized unbalanced pricing. We successfully argued that our client’s pricing was balanced and potentially fairer to the government – a difficult argument to make in LPTA solicitations because of the discretion granted to contracting officers. Our challenge was successful and following the court’s order granting a preliminary injunction, the government was forced to take corrective action.

(Torres AES v. United States, 1:13-cv-00898 (Damich, J.))

Effectively Advocating for a Government Contractor Facing Debarment

Having spent over 30 years in the environmental and renewable energy industry, our client was dismayed when he received a Notice of Suspension and Proposed Debarment (the Notice) from the EPA. Facing the possibility of a three-year debarment, our client knew that such a black mark would mean not only the end of his company, but also the end of his career.

Ifrah Law set to work on contesting the Notice and addressing the mitigating and aggravating factors. While our written response was strong, the bold and clearly reasoned advocacy we provided during the oral argument had the biggest impact on the case. Ifrah argued that this was a one-time oversight during an alleged emergency situation, for which our client was truly remorseful. But we took the additional step of arguing that that our client never should have been prosecuted in the first place, and that he was the victim of an overzealous prosecutor.

After the record closed, we were told that a settlement of two years was feasible, but we refused to settle. When the decision was rendered, our client faced no debarment whatsoever, allowing him to resume his government contracting business immediately. The EPA legal counsel involved in this matter told us that the advocating we did on our client’s behalf was one of the best she has ever seen.

Securing Dismissal of a False Claims Qui Tam Suit

Jeff Ifrah successfully represented global health care leader Merck in a False Claims Act qui tam suit and got the case dismissed.

The suit involved a whistleblower that worked for a health care buying company (a group purchasing organization that purchases supplies and drugs). Terminated from the buying group, the employee alleged she was retaliated against because of issues she raised about the buying process.

The case was brought before the U.S. District Court for the Northern District of Texas, and 18 drug companies were named as defendants in an alleged bribery scheme. Jeff represented Merck, which was one of the named defendants. He filed a successful motion to dismiss the complaint, based on the former employee’s alarming lack of specificity in her claim.

Not only was our motion to dismiss successful, it was efficient: Jeff won the dismissal roughly one year after Merck and the other defendants were originally served.

(United States ex rel. Fitzgerald v. Novation LLC, et al., S.D. Tex., No. 3:03-CV-01589))

Successfully Negotiating the Sale of Assets During a Government Investigation

When a company that is under investigation for money laundering decides to sell its assets, what was once a straightforward sales process becomes a complex negotiation. That is what happened with our client, a provider of diagnostic testing equipment.

Ifrah Law and Michelle Cohen represented the company in its sale of radiology and cardiology diagnostic services equipment, which involved numerous challenges. Understandably, the buyer was concerned about the ongoing criminal investigation, and Michelle worked closely with them to address their concerns about representations and warranties and possible post-sale seizure from the government. Additionally, since there were bank liens on some of the assets, Michelle worked with the bank’s outside counsel to arrange a prompt payoff, obtain a satisfactory pay-off letter and secure a release of the liens in order to close the deal. Michelle also worked with the buyer to create a creditor payment plan that would payoff unsecured creditors and obtain releases from them in order to address the buyer’s concerns about unsecured creditors seeking relief from the buyer. Finally, she created an employee fund (funded by the buyer) to pay for uncompensated leave time.

These complicated issues were resolved in less than two weeks, as a result of Michelle’s skilled negotiations with all parties. The buyer was represented by Delaware’s largest law firm.

Ensuring TCPA Compliance for a Global Provider of Customer Management Services

On behalf of our client, a leading provider of customer management services with call centers around the world, Ifrah Law led a full-scale review of its customer communications to ensure that they comply with federal and state requirements, including those of the TCPA and the FTC’s Telemarketing Sales Rule (TSR). We addressed the many different types of calls that the company undertakes on behalf of its varied customer base – service calls, appointments, live sales calling and pre-recorded calls – to ensure that its call centers are using consistent protocols and controls in the United States, and that these protocols are in compliance with the TCPA and TSR. Our client trusted Ifrah Law with this extensive project due to our long history with managing TCPA matters – we have been involved with the TCPA since its inception in 1991 – and due to our prior work for the client, including successfully representing the client in two FCC inquiries.

We worked with the company’s Director of Privacy to develop a thorough understanding of the types of calls that the company makes for its customers, and the contractual protections that are in place and which could be revised to protect the company further. A critical aspect of this project was to educate leaders within the company that there are different TCPA requirements based on the type of call: technology used, person being called, whether the call is pre-recorded or live; mobile or business. We also wrote the call center guidelines and controls to ensure that all employees – from those being trained to the marketing team – had the same information regarding how to handle different types of customer call projects.

This large-scale process took a year to complete. Once the documentation was finalized, our client was ready to begin a company-wide training program on the guidelines, well in advance of TCPA rule changes.

Clearing SEC Charges Against a Former Securities Broker

When the U.S. government pushed Frederick O’Meally, the former Prudential Securities Inc. broker pushed back – and won.

Ifrah Law acted as co-lead counsel in obtaining a jury verdict, rejecting claims by the U.S. Securities and Exchange Commission that O’Meally defrauded 60 mutual fund companies. The jury also rejected the SEC’s negligence claims with respect to 54 of the funds and found only that O’Meally was negligent in his conduct with respect to six of the funds.

Mr. O’Meally had fought the SEC for eight years, claiming his innocence and sticking up for his rights. The SEC asserted that the mutual fund companies had tried to prevent O’Meally from market timing on behalf of his clients, and that he had continued doing so through deception involving multiple account numbers and numerous financial advisor identifying numbers used in trades. But after a four-week trial, the jury found that the defendant did not commit any intentional fraud against the mutual fund companies. Evidence at trial showed that O’Meally had not misused these tools and that, in fact, all of his trading practices had been approved multiple times by his supervisors, by Prudential Securities lawyers and compliance personnel, and even by outside regulators.

The O’Meally case was one of the very small number of SEC compliance cases that go to trial each year, and one of an even smaller number of cases in which a jury has completely rejected SEC claims of fraud. While Prudential Securities and a number of other brokers targeted by the SEC negotiated settlements, Ifrah Law was part of the team that helped Frederick O’Meally vindicate his claims that he was innocent of the SEC’s fraud accusations.

(Securities & Exchange Commission v. O’Meally, No. 06-Civ-6483 (LTS) (S.D.N.Y.), No. 13-1116 (2d Cir.) )