Surety Industry Successful in Fighting False Claims Act Liability – SFAA Supports Effort with Amicus Brief
July 20, 2022 (WASHINGTON, DC) – The Surety & Fidelity Association of America (SFAA), a nonprofit, nonpartisan trade association representing all segments of the surety and fidelity industry, hails the Order entered by the United States District Court for the District of Columbia dismissing all claims against Hanover Insurance Company and Hudson Insurance Company under the Federal False Claims Act. In addition, all claims against Centennial and Michael Schendel, the surety agency and the account agent, were also dismissed.
In its Amicus Brief, ex rel. Andrew Scollick v. Vijay Narula, et al., SFAA argued Plaintiff claims would result in a novel and precedent-setting theory expanding liability to sureties for False Claims Act violations related to government determinations certifying contractors as minority businesses qualified for set-aside construction contracts. “We are extremely pleased with the court’s Order and were confident the court’s decision would align with the surety industry’s position, resulting in a positive outcome for the defendants, the surety industry, and most importantly, small, disadvantaged, and emerging contractors,” said Julie Alleyne, Vice President, Policy & General Counsel, SFAA. “Any other ruling would certainly have had a detrimental impact on the ability of these contractors to obtain bonding for federal construction projects and for surety companies to provide these essential bonds,” continued Alleyne.
SFAA also argued the federal government, and not the surety industry, has the duty and obligation to establish and police contractors the government certifies as disadvantaged business enterprises eligible for set-aside contracts. A decision in favor of the plaintiff would have unfairly and unreasonably expanded sureties’ exposures, thereby limiting sureties’ ability to issue Miller Act surety bonds for set-aside construction contracts.
The Surety & Fidelity Association of America (SFAA) is a nonprofit, nonpartisan trade association representing all segments of the surety and fidelity industry. Based in Washington, D.C., SFAA works to promote the value of surety and fidelity bonding by proactively advocating on behalf of its members and stakeholders. The association’s more than 450 member companies write 98 percent of surety and fidelity bonds in the U.S. For more information visit www.surety.org.