Fourth Circuit: Roger C. Day Jr. Appeals FCA Dismissal

• Roger C. Day Jr., a federal inmate, is appealing the dismissal of his False Claims Act lawsuit against major defense contractors.
• Day alleges a decades-long scheme involving the DLA DIBBS system for sole-source military parts, costing taxpayers hundreds of billions.
• The U.S. government intervened in Day's case to dismiss it, citing a lack of specific fraud and potentially burdensome discovery.
• The district court upheld the government's dismissal, ruling the FCA establishes the government as the dominant party in such actions.
• Day's attorney argues the government violated his client's due process rights by dismissing the qui tam action without a proper investigation.

The outcome of this Roger C. Day Jr. qui tam appeal holds significant implications for future False Claims Act litigation.

A federal inmate, Roger C. Day Jr., recently brought his False Claims Act case before the Fourth Circuit, seeking to reinstate his allegations of widespread defense contractor procurement fraud and remove federal prosecutors from the proceedings. Day, who is currently incarcerated for orchestrating a separate fraudulent procurement scheme, contends that the U.S. government failed to adequately investigate his claims before moving to dismiss his lawsuit against five major defense contractors. Federal prosecutors, however, maintain they adhered to all proper procedures and concluded that Day's allegations lacked substantiation.

Day's lawsuit, filed in 2023 in the Eastern District of Virginia, targets Boeing, Lockheed Martin, Raytheon, General Dynamics, and Northrup Grumman. He alleges that these companies, in collusion with the U.S. Defense Logistics Agency (DLA), have for over two decades misused an online bidding system known as DIBBS. According to Day, this system, intended for competitive bids, was improperly utilized to procure sole-source replacement parts for military vehicles. He asserts that specific procurement protocols, which include capping profit margins, should have been followed for such sole-source items, rather than using the DLA DIBBS bidding system fraud scheme. Day estimates this alleged misconduct has cost American taxpayers hundreds of billions of dollars.

His knowledge of this purported fraud stems from his own experience in illicit procurement activities. Day, serving a 105-year sentence for wire fraud, claims he uncovered the scheme while engaged in a parts substitution operation involving shell companies and an automated bidding system for DLA contracts. A call from the DLA office in Richmond, Virginia, questioning his bid on a contract for a part that only the manufacturer could supply, reportedly sparked his suspicions. He found it incongruous that a competitive bidding system like DIBBS would be used for a contract where no third party could fulfill the terms.

The False Claims Act (FCA) permits private citizens, known as relators or whistleblowers, to initiate qui tam lawsuits on behalf of the U.S. government to recover funds lost to fraud. While the government can intervene in these cases, it also retains the authority to dismiss them. In Day's case, the U.S. government intervened not to support his claims, but to seek their dismissal. The U.S. Attorney’s Office for Eastern Virginia initially argued that it was not obligated to provide a reason for its dismissal motion. However, following judicial inquiry, federal attorneys clarified their position.

They asserted that Day had not identified any concrete instances of fraud, instead using the FCA to challenge government policies and commercial practices he disagreed with, such as contractors' refusal to sell parts to distributors. Furthermore, the government contended that allowing the case to proceed would not be in the public interest, citing the potentially burdensome discovery demands on federal agencies. Day countered by requesting the court to remove the federal government as a plaintiff, arguing that the United States, through the DLA, was effectively a defendant in the alleged scheme.

U.S. District Judge Robert E. Payne ultimately denied Day’s motion and dismissed the case in 2025. Judge Payne's ruling emphasized that while the FCA does not explicitly address a whistleblower's ability to block federal intervention, the statute clearly establishes the government as the primary victim and dominant party in such actions. This district court decision set the stage for the current Roger C. Day Jr. Fourth Circuit FCA appeal.

During the recent Fourth Circuit hearing, Day's attorney, Elliott Harding of Charlottesville, Virginia, argued that the government's dismissal of the case violated his client's whistleblower due process rights. This argument places a critical spotlight on the scope of the government's power in False Claims Act government intervention dismissal scenarios. The three-judge panel, however, expressed skepticism regarding Day's ability to prevent the government from intervening in and dismissing an FCA case, specifically questioning whether Day possessed a property interest in the litigation that would entitle him to such due process protections.

The outcome of this Roger C. Day Jr. qui tam appeal holds significant implications for future False Claims Act litigation. It will help clarify the boundaries of government discretion in dismissing qui tam actions, particularly when a relator alleges procedural irregularities or due process infringements. The court's decision will be closely watched by legal practitioners representing both whistleblowers and defendants in defense contractor procurement fraud cases, as it could redefine the balance of power between the government and private relators in these complex legal battles.

This case highlights the ongoing legal debate regarding the government's power to dismiss False Claims Act qui tam actions, even when the relator alleges due process violations. Lawyers representing whistleblowers or defending against FCA claims should monitor the Fourth Circuit's decision for clarity on the scope of government intervention and the rights of relators in such cases.

Source: Original reporting via Courthouse News Service