Relator Fees and Settlements in Government Contracts Cases (Including Fraudulent Inducement)

In July of 2019, the whistleblower received $2.1 Million when ITT Cannon agreed to pay $11 million to settle allegations that it violated the FCA by supplying connectors to the U.S. military that did not comply with testing protocols. DOJ alleged that the company did not conduct required periodic testing on six models of electrical connectors from 2008 to 2017. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, ITT Cannon to Pay $11 Million to Settle False Claims Allegations for Untested Electrical Connectors (Jul. 16, 2019).

In July of 2019, Cisco Systems agreed to pay $8.6 million to settle multistate litigation alleging that the company violated the FCA and state whistleblower acts because it allegedly knowingly failed to report or remedy flaws in the security surveillance system it sold to multiple states and the federal government that made the system vulnerable to hackers. See Press Release, NY State Office of the Attorney General, Attorney General James Secures $6 Million From Cisco Systems In Multistate Settlement (Aug. 1, 2019); Mark Chandler, Executive Platform: A Changed Environment Requires a Changed Approach, Cisco Blogs (Jul. 31, 2019).

In August of 2019, the majority owner and former CEO of a Virginia-based defense contractor agreed to pay $20 million to resolve allegations that it violated the FCA by fraudulently procuring federal contracts reserved for small businesses. DOJ alleged that, based on misrepresentations made by the former CEO, the company was awarded multiple small business set-aside contracts for which it was ineligible. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Former CEO of Virginia-Based Defense Contractor Agrees to Pay $20 Million to Settle False Claims Act Allegations Related to Fraudulent Procurement of Small Business Contracts (Aug. 20, 2019).

In August of 2019, American Airlines agreed to pay approximately $22.1 million to resolve allegations under the FCA that the airline falsely reported the times at which it delivered United States mail to foreign postal administrations or other intended mail recipients allegedly to conceal its noncompliance with contractual obligations to the United States Postal Service. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, American Airlines Inc. Agrees To Pay $22 Million to Settle False Claims Act Allegations for Falsely Reporting Delivery Times of U.S. Mail Transported Internationally (Aug. 20, 2019).

In a 2019 case in which stemmed from a whistleblower lawsuit brought by a former university employee, in which the Relator received $33.75 million from the settlement, Duke University agreed to pay the government $112.5 million to resolve allegations that it violated the FCA by submitting applications and progress reports that contained purportedly falsified research on federal grants to the National Institutes of Health (“NIH”) and to the Environmental Protection Agency. Among other allegations, DOJ asserted that the university fabricated research results related to mice to claim millions of grant dollars from the NIH. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Duke University Agrees to Pay U.S. $112.5 Million to Settle False Claims Act Allegations Related to Scientific Research Misconduct (Mar. 25, 2019).

In May of 2019 a whistleblower received over $4.3 million from the resolution of a case in which Informatica agreed to pay $21.57 million to resolve allegations that it caused the government to be overcharged by providing misleading information about its commercial sales practices, which was then used in General Services Administration (“GSA”) contract negotiations. DOJ alleged this caused GSA to agree to less favorable pricing, which led the government purchasers to be overcharged. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Informatica Agrees to Pay $21.57 Million for Alleged False Claims Caused by Its Commercial Pricing Disclosures (May 13, 2019).

In November of 2018, three South Korea-based oil refiners and logistics companies agreed to pay a total of $236 million in criminal fines and civil damages to resolve allegations of a bid-rigging conspiracy.  The settlements consisted of $82 million in criminal fines and $154 million for alleged civil antitrust and FCA violations.  The FCA civil investigation arose from a whistleblower lawsuit involving allegations of false statements made to the government in connection with the companies’ decade-long conspiracy to rig bids on Department of Defense contracts to supply fuel to Army, Navy, Marine Corps, and Air Force bases in South Korea. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Three South Korean Companies Agree to Plead Guilty and to Enter Into Civil Settlements for Rigging Bids on United States Department of Defense Fuel Supply Contracts (Nov. 14, 2018).

In August of 2017, the whistleblower received approximately $2.9 million for his Relator award when ADS Inc. agreed to pay $16 million to settle allegations that they knowingly conspired with, and caused, small businesses to submit false claims for payment related to fraudulently obtained small business contracts.  The defendant and its subsidiaries allegedly induced the government to award certain contracts by misrepresenting eligibility requirements, including the small businesses’ affiliation with the defendant, size, and standing as service-disabled or as qualified socially or economically disadvantaged businesses under federal business development programs.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Defense Contractor ADS Inc. Agrees to Pay $16 Million to Settle False Claims Act Allegations (Aug. 10, 2017).

In March of 2017, the whistleblower, a former employee of the company, received a share of over $10.19 million when CA Inc. agreed to pay $45 million to resolve allegations that the company made false statements in the negotiation and subsequent administration of a General Services Administration (“GSA”) contract for software licenses and maintenance services.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, CA Inc. to Pay $45 Million for Alleged False Claims on Government-Wide Information Technology Contract (Mar. 10, 2017).

In July of 2016, the whistleblowers received approximately $1.4 million of the  settlement when five information technology companies agreed to pay a total of $5.8 million to resolve allegations that they falsely certified that one of the companies met small business requirements in order to obtain contracts reserved for small businesses, even though its affiliation with the other companies was an alleged disqualifier.  See Press Release, U.S. Atty’s Office for the Central Dist. of Cal., U.S. Dep’t of Justice, Information Technology Companies to Pay $5.8 Million for Misrepresentations Relating to Small Business Status and Contract Fee Payments (July 6, 2016).

In July of 2016, a federal district court judge approved a $9.5 million settlement with Columbia University to resolve allegations related to the university’s purported receipt of excessive cost recoveries in connection with 423 research grants funded by the NIH.  The government alleged that the university sought federal reimbursements for costs at a higher “on-campus” rate, even though the research was primarily conducted at off-campus facilities owned and operated by the state and by New York City and even though the university did not pay for the use of the space for most of the relevant period.  See Press Release, U.S. Atty’s Office for the Southern Dist. of N.Y., U.S. Dep’t of Justice, Manhattan U.S. Attorney Announces $9.5 Million Settlement With Columbia University For Improperly Seeking Excessive Cost Recoveries In Connection With Federal Research Grants (July 14, 2016).

In January of 2016, the DOJ announced a $9 million settlement stemming from alleged FCA violations connected to United States Agency for International Development (USAID) contracts.  According to the government, URS E & C Holdings, Inc. misrepresented its eligibility and qualifications for infrastructure projects in Egypt in the 1990s by concealing from the government that it had already engaged joint-venture partners for the project. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, URS E & C Holdings, Inc. Agrees to Pay $9 Million to Resolve False Claims Act Allegations (Jan. 6, 2016).

In November of 2015, the relators split $11.3 million for their Relator share when a for-profit education company agreed to pay $95.5 million to settle claims that the company falsely certified that it was compliant with Title IV of the Higher Education Act and similar state statutes. The United States and five states intervened in one of the four qui tam lawsuits.   See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, For-Profit College Company to Pay $95.5 Million to Settle Claims of Illegal Recruiting, Consumer Fraud and Other Violations (Nov. 16, 2015).

In November of 2015, the University of Florida agreed to pay $19.8 million to settle claims that the university misused funds from hundreds of federal grants awarded over a five-year period by overcharging the HHS for employee salaries, administrative costs, and services provided by an affiliate of the university. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, University of Florida Agrees to Pay $19.875 Million to Settle False Claims Act Allegations (Nov. 20, 2015).

In August of 2015, the Whistleblower received $6 Million when Investigations Services agreed to forego payments of at least $30 million owed to them by the U.S. Office of Personnel Management (“OPM”) to settle allegations that the company falsely represented compliance with certain requirements regarding background investigations in its contract with OPM.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Investigations Services Agrees to Forego at Least $30 Million to Settle False Claims Act Allegations (Aug. 19, 2015); Christian Davenport, The Whistleblower Who Exposed U.S.’s Flawed Security Clearance System Finally Gets His Reward, The Washington Post (Dec. 18, 2015).

In June of 2015, the Whistleblowers shared in $1.8 Million of the settlement proceeds when a for-profit education company agreed to pay $13 million to settle allegations that it submitted false claims to the Department of Education to receive student aid funding for its programs.  The company allegedly altered admissions test scores, falsified applications for federal student aid, and falsified student diplomas.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, For-Profit Education Company to Pay $13 Million to Resolve Several Cases Alleging Submission of False Claims for Federal Student Aid (June 24, 2015).

In June of 2015, VMWare and Carahsoft agreed to pay $75.5 million to settle allegations that they falsely represented commercial pricing practices for products and services under a GSA Program contract, thereby overcharging the government.  The case began as a qui tam lawsuit filed by a former vice president at one of the companies. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, VMWare and Carahsoft Agree to Pay $75.5 Million to Settle Claims that they Concealed Commercial Pricing and Overcharged the Government (June 30, 2015).

In December of 2015, Bollinger Shipyards agreed to pay $8.5 million and release contract claims to settle allegations that the company falsely misrepresented the longitudinal strength of boats that it retrofitted under a contract with the Coast Guard.  The misrepresentations allegedly led to the boats having insufficient longitudinal strength, which caused the boats to fail after they were in service. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Bollinger Shipyards Agrees to Settle False Claims Act Suit (Dec. 9, 2015).

In December of 2015, the Whistleblower (another furniture company) received $2.25 Million when a furniture import company agreed to pay $15 million to settle claims that the company knowingly made or conspired with others to make false statements on documents provided to U.S. Customs and Border Protection to avoid paying antidumping duties on bedroom furniture imported from the People’s Republic of China.  The company allegedly classified the bedroom furniture as other types of furniture that are not subject to duties.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Texas-Based Importers Agree to Pay $15 Million to Settle False Claims Act Suit for Alleged Evasion of Customs Duties (Dec. 21, 2015).

In November of 2015, the Whistleblower received $2.3 Million when Netcracker Technology Corp. and Computer Sciences Corp. agreed to pay $11.4 million and $1.35 million, respectively, to settle claims that they used employees who had no security clearances to perform work on a Defense Information Systems Agency (“DISA”) contract despite knowing that the contract required employees to have security clearances.  According to the government, the use of these employees caused the submission of false claims for payment to DISA.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Netcracker Technology Corp. and Computer Sciences Corp. Agree to Settle Civil False Claims Act Allegations (Nov. 2, 2015).

In November of 2015, a defense contractor agreed to pay $25.6 million to settle claims that the contractor knowingly sold defective holographic weapon sights to the U.S. Department of Homeland Security, the U.S. Department of Defense, and the Federal Bureau of Investigation.  The contractor allegedly did not disclose the defects for years after selling the equipment to the government, in violation of the contract.  See Press Release, U.S. Atty’s Office for the Southern Dist. of New York, U.S. Dep’t of Justice, Manhattan U.S. Attorney Files and Simultaneously Settles False Claims Act Lawsuit Against Defense Contractor and Its President for Multi-Year Fraud Involving Sale of Defective Weapons Sights to U.S. Military and Other Agencies (Nov. 25, 2015).

In October of 2015, BP agreed to pay $82.6 million to settle an FCA investigation and to reimburse the United States for royalties allegedly lost as a result of the April 2010 oil spill in the Gulf of Mexico.  This settlement was part of a $20.8 billion settlement between the oil company, the United States, and five states. In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, 27 (MDL No. 2179, Sept. 28, 2015); See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, U.S. and Five Gulf States Reach Historic Settlement with BP to Resolve Civil Lawsuit Over Deepwater Horizon Oil Spill (Oct. 5, 2015).

In October of 2015, Pitney Bowes Presort Services agreed to pay $9.4 million to settle allegations that the company improperly claimed postage discounts offered by the U.S. Postal Service.  The company allegedly claimed discounts on postage for mail that was not in compliance with certain requirements necessary to obtain the discount, resulting in underpayment of postage charges to the United States. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, United States Settles with Pitney Bowes Presort Services for Underpaying Postage Owed to U.S. Postal Service (Oct. 13, 2015).

In October of 2015, Boeing agreed to pay $18 million to settle claims that the company submitted false claims for certain charges associated with U.S. Air Force contracts.  According to the government, the company knowingly overcharged the U.S. Air Force for labor charges associated with the maintenance and repair of certain aircraft.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Boeing Pays $18 Million to Settle False Claims Allegations (Oct. 14, 2015).

In October of 2015, APL Ltd agreed to pay $9.8 million to settle allegations that it billed the Department of Defense for services it did not adequately provide under the parties’ contract.  The contract required the carrier to attach a tracking device to every container to provide tracking services.  The carrier allegedly billed the Department of Defense for tracking services when it knew that the tracking devices were either failing to properly transmit data or were not attached to the shipping containers as was required. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, APL Ltd. to Pay $9.8 Million to Resolve Alleged False Claims Under the Department of Defense Shipping Contract (Oct. 27, 2015).

In March of 2015, Fireman’s Fund Insurance Company agreed to pay $44 million to settle claims that the company knowingly issued ineligible insurance policies under a federal crop insurance program.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Fireman’s Fund Insurance Company to Pay $44 Million to Settle False Claims Act Allegations (Mar. 23, 2015).

In April of 2015, Sprint Communications, Inc. agreed to pay $15.5 million to resolve allegations that it overbilled the federal government for costs it incurred executing court-issued wiretaps, pen registers, and “trap devices.”  By statute, telecommunications companies are permitted to recover those costs from the government, but the company allegedly included unallowable network infrastructure costs in its reimbursement requests.  See Press Release, U.S. Attorney’s Office, C. Dist. of Cal., U.S. Dep’t of Justice, Sprint Communications, Inc. Agrees To Pay $15.5 Million To Resolve Allegations Of Overcharging Law Enforcement Agencies For Court-Ordered Wiretaps (Apr. 9, 2015).

In May of 2015, the Relator received $3.75 Million when United Parcel Service agreed to pay $25 million to settle allegations that it concealed its failure to comply with its overnight service contracts for state and federal government packages.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, United Parcel Service Agrees to Settle Alleged Civil False Claims Act Violations (May 19, 2015).

In June of 2015, a federal judge in Texas issued a $663 million judgment against Trinity Industries accused of producing faulty products. The whistleblower in the case, a former competitor of the business, alleged that he discovered that the company made changes to its guardrails without notifying federal regulators.  See Final Judgment, United State ex rel. Harman v. Trinity Indus., No. 2:12-cv-00089, Dkt. No. 713 (E.D. Tex. June 09, 2015). Note—This case was overturned on appeal.

In December of 2014, the Whistleblowers received $8 Million of the settlement proceeds when Iron Mountain Companies paid $44.5 million to settle claims that they overcharged government entities. The companies had General Services Administration (“GSA”) contracts to provide record storage services to government entities through GSA’s Multiple Award Schedule program. The companies allegedly failed to satisfy contractual obligations requiring the companies to provide accurate information regarding their commercial sales practices during negotiations and purportedly failed to comply with a price reduction clause. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Iron Mountain Companies Pay $44.5 Million to Settle Alleged False Billings for Storing Government Documents and Data (Dec. 19, 2014).

In December of 2014, a defense contractor agreed to pay $27.5 million to settle allegations that it purportedly overbilled the government for work performed by underqualified employees. The defense contractor had contracts to provide the Army in Afghanistan and Iraq with rapid access to products and services. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Defense Contractor Agrees to Pay $27.5 Million to Settle Overbilling Allegations (Dec. 19, 2014).

In December of 2014, the qui tam whistleblowers received over $16 Million for their Relator share when two foreign companies settled alleged civil violations relating to services provided to U.S. troops in Afghanistan and also pled guilty to related charges. The companies agreed to pay $288.35 million in the criminal matter and an additional $146 million to resolve the civil cases alleging violations of the FCA. In the civil cases, the settlement consisted of $101 million to settle allegations that the companies overbilled for food and water they contracted to provide to American soldiers in Afghanistan. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Defense Contractor Pleads Guilty to Major Fraud in Provision of Supplies to U.S. Troops in Afghanistan (Dec. 8, 2014).

In October of 2014, the DOJ announced that an antenna and radio systems company resolved allegations it submitted inflated claims by agreeing to pay $10 million. The government alleged that the company knowingly misrepresented the cost to manufacture electronic warfare antennas, resulting in inflated pricing.  See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, First RF Corporation Agrees to Pay $10 Million to Resolve False Claims Act Allegations (Oct. 24, 2014).

In October of 2014, First RF Corporation agreed to pay $13.7 million to settle claims that it allegedly overbilled the government. The government alleged that the defendant knowingly increased the amount billed by including work performed by employees who did not meet required job qualifications.     See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Defense Contractor Agrees to Pay $13.7 Million to Settle Allegations of Overbilling (Oct. 7, 2014).

In July of 2014, HSBC Bank agreed to pay $10 million to resolve claims that it failed to exercise sufficient oversight over the foreclosure charges it submitted to the Federal Housing Administration (“FHA”) and Fannie Mae for reimbursement. See Press Release, U.S. Attorney’s Office, S. Dist. of N.Y., U.S. Dep’t of Justice, Manhattan U.S. Attorney Settles Civil Fraud Claims Against HSBC Bank For Failure To Monitor Fees Submitted For Foreclosure-Related Services (July 1, 2014).

In August of 2014, the DOJ announced that Hewlett Packard Company agreed to pay $32.5 million to resolve allegations that the manufacturer overcharged the U.S. Postal Service (“USPS”) for products from October 2001 to December 2010. The government alleged that the manufacturer failed to comply with pricing terms of its contract with USPS, including a term requiring the manufacturer to provide USPS with prices no greater than those offered to its customers with comparable contracts. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Hewlett-Packard Company Agrees to Pay $32.5 Million for Alleged Overbilling of the U.S. Postal Service (August 1, 2014).