I will mention three whistleblower cases below that were settled last month. These are examples of why whistleblowers are so important to the government’s efforts to combat fraud by government contractors. The American taxpayers owe a debt of gratitude to whistleblowers who have the courage required to report their employer’s fraudulent conduct.
SHIPYARD SETTLES $79 MILLION FCA LAWSUIT OVER BAD COAST GUARD HULLS
Bollinger Shipyards Inc. will pay the federal government $8.5 million to settle False Claims Act (FCA) allegations it misled the U.S. Coast Guard about vessel modifications that ultimately made them unseaworthy. After first being dismissed by a Louisiana federal judge in 2013, the now-revived suit alleged that at least eight of the Coast Guard’s boats were rendered unseaworthy because Bollinger miscalculated the hulls’ resistance to bending after adding 13-foot extensions. Bollinger said the 13-foot hull extensions would not compromise the integrity of the vessels. But eight of the boats, known as patrol cutters, were eventually rendered unseaworthy because of the modifications, which took place between 2000 and 2006. Bollinger allegedly ran its strength calculations three times and provided the government with the highest one. The company also did not follow internal controls that would have prevented the miscalculations.
The case came back to the Louisiana court after the Fifth Circuit reinstated the government’s case in 2014 after U.S. District Judge Sarah Vance dismissed the suit in 2013 because the government failed to show that the ship repair company’s mistake was intentional. But the appellate panel ruled that the U.S. was not required to plea Bollinger’s knowledge with such specificity. It was enough to show that Bollinger ran three different calculations with false inputs and submitted the highest one to the Coast Guard to infer it knowingly put false data into its application, according to the Fifth Circuit’s 2014 opinion.
L-3 WILL PAY $26 MILLION TO GOVERNMENT IN FALSE CLAIMS ACT SUIT
L-3 has agreed to pay $25.6 million to settle the government’s False Claims Act suit over EOTech weapons sights sold to the military and law enforcement that the defense contractor allegedly knew were thrown off by extreme temperatures. The U.S. Department of Justice (DOJ) alleged in its federal court lawsuit that L-3 Communications’ EOTech Inc. had sold “tens of millions of dollars” worth of holographic weapon sights to the government despite knowing since 2006 that the sights would drift away from where the firearm was pointed when it got too hot. The government said:
EOTech represented to DOD that its sights performed in temperatures ranging from -40 degrees to 140 degrees Fahrenheit, and in humid conditions. Those environmental performance representations were important to the United States because U.S. troops used EOTech’s combat optical sights in Iraq and Afghanistan, as well as in the jungle, mountains, desert, and other extreme environmental conditions around the world.
EOTech — part of L-3’s Warrior Systems Division — waited years to tell its U.S. Department of Defense (DOD), U.S. Department of Homeland Security (DHS) and FBI clients that the sights, which superimpose a target reticle on an optical window, were prone to “thermal drift.” The complaint also named EOTech President Paul Mangano as a Defendant. Some of the sights are reserved specifically for military weapons like grenade launchers and large crew-served guns, the government said, while many of the sights are bound directly for special forces units. EOTech separately discovered that the sights were thrown off by heat, humidity, and temperatures below freezing, but waited years to say anything despite a contractual obligation to do so, all while touting the company’s military sales to boost EOTech’s commercial market profile, according to the government.
The suit said EOTech, which was acquired by the L-3 Communications Corp. in 2005, did not tell the Pentagon about the heat-specific problem until after the FBI independently discovered the issue in March 2015 and presented its findings to the contractor. The problem with the cold was discovered by early 2007, the government alleged, but EOTech didn’t say anything until it had a fix ready, which took more than a year. The government said that EOTech presented its fix to DOD as “an upgrade to a quality product that already conformed to specifications.”
A problem with humidity, where moisture managed to get into the sights, was discovered by 2008 but was not disclosed until 2013, according to the suit, which pointed to a large shipment of returned sights from the Pentagon in 2008 where moisture damage was found in virtually every unit. EOTech had pitched its fix “as an upgrade to a quality product that conformed to specifications,” the government said. EOTech sold the sights to the military starting in 2004 and to the DHS and the FBI in 2010, according to the government.
LOUISIANA WHISTLEBLOWER TO RECEIVE $750,000
A whistleblower who lost his state contract after reporting his concerns that a state-funded dredging project violated environmental laws is set to receive $750,000 after a Baton Rouge jury ruled in his favor. Dan Collins was under contract to the state Department of Natural Resources (DNR) as a land research consultant when he reported his concerns about the Bayou Postillion dredging project in Iberia Parish.
Collins said the water quality improvement project was actually a million-dollar oil-and-gas access canal project that benefited a family of landowners along the bayou. “It reads like a John Grisham novel,” Collins said. “It’s so remarkable. … It was total obstruction once I uncovered it.” Collins said the dredging violated state and federal environmental laws. But the Natural Resources Department ignored Collins’ report and allowed the canal to be dredged and prevented Collins and his company, CPL & Associates Inc., from doing any more work for the agency.
Collins said he brought the information to then-Gov.-elect Bobby Jindal’s transition team in 2007, the state Attorney General’s Office and the state Legislative Auditor’s Office, but DNR convinced other state officials that the agency’s position was correct. In 2008, the Atchafalaya Basin Group and the Louisiana Environmental Action Network filed a federal lawsuit against the state, which was dismissed on the grounds that the environmental groups didn’t have proper standing to file. The jury awarded Collins $250,000 in his case. Under Louisiana’s environmental whistleblower law, Collins is entitled to triple the award, plus attorney’s fees and costs. Crystal Bounds represented Collins in this case.
Source: Law360.com and Insurance Journal
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