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Worker Drops FCA Suit Against Shipbuilder

Both sides agreed to walk away from a whistleblower complaint on April 7, claiming that neither party had made payments or admitted fault. A set of workers had alleged that shipbuilder, Austal USA LLC ("Austal"), had defrauded the U.S. government by billing for higher salaries than it paid out.

The False Claims Act ("FCA" or "the Act") exists as an opportunity for citizens to bring the government's attention to fraudulent conduct that costs the American taxpayer. Under the FCA, whistleblowers can earn up to 30 percent of what the government recovers. In the past three years, the government has recovered nearly $14 billion.

The plaintiffs alleged that Austal utilized cost-checking software to pad its salary numbers. Plaintiffs asserted, "Defendants falsified data entered into Labor Metrics concerning the vessel on which its employees worked. On numerous occasions, Plaintiffs observed, and otherwise have knowledge of, Defendant[s] enter charge numbers for vessels other than those actually worked on by the employee that performed the recorded work." Moreover, the complaint asserted that the defendants would ask more expensive employees to bill their hours to government contracts in hope of earning more money. A second motive, as reported in the complaint, held plaintiffs believed that the "falsified time entries were being submitted to the U.S. Navy in order to receive progress payments toward the construction of the JHSV and LCS and to win and maintain contracts for such construction."

Austal vigorously denied the allegations. The defendants commented the accusations were speculative and imprecise, based on "information and belief" rather than actual evidence of wrongdoing. They criticized the complaint further, arguing that the plaintiffs lacked specifics, including dates, company personnel, or the amount of money charged to the Navy. The defendants claimed that the deficiencies went to the heart of the matter and could not be rectified by an amended complaint. In the end, both sides walked away without acknowledgment of wrongdoing.

The legal team at SFMS has significant experience litigating whistleblower matters. If you have any questions regarding this subject or this posting, please contact Alec Berin (aberin@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

Sources:

http://www.law360.com/articles/782162

Case No.: 1:14-cv-00261, Complaint (Document [1])

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