Defense contractors and overbilling seem to go hand in hand. Although anyone can make a mistake, the government and courts do a great job of insuring that the False Claims Act is only used for intentional or reckless conduct. Some defense contractors such as Boeing seem to be serial offenders and are frequently sued. Add to the repeat offender list aerospace contractor L-3.
Two weeks ago L-3 and one of its affiliates, Vertex Aerospace, agreed to pay the federal government $4.6 million to settle allegations that the company overbilled the military for helicopter maintenance. That settlement doesn’t end the company’s legal woes, however. A second whistleblower suit is still ongoing.
The first suit was filed by whistleblower Robert Martin, an intermittently employed sheet metal mechanic who helped maintain U.S. military helicopters in Kuwait and Iraq for L-3. According to the complaint, L-3 and its affiliate Vertex maintain over 3500 aircraft and helicopters, mostly for the government.
Martin claims L-3 bills for its aircraft services on a “time and materials” basis meaning the government is billed by the hour and parts. Because overhead is already built into the rate, L-3 should just be billing for its direct labor services. Despite the clear mandates of the contract, Martin said L-3 padded its invoices by billing for training, inflating hours, billing for travel and billing as if technicians were working on aircraft in Kuwait even though these workers were training within the United States.
For his efforts in bringing the case forward, Martin will receive $800,000. (Whistleblowers generally receive 15% to 30% percent of whatever the government collects.)
Martin filed his suit in Georgia where L-3 is headquartered. His case isn’t the only False Claims Act suit against L-3, however.
Court records show a second whistleblower suit was filed against the company, one that is still pending. According to that complaint, former employee Steve Karol claimed L-3 was billing the military for more time than was actually worked.
First to File Bar and the False Claims Act
As we have noted many times in this blog, only the first whistleblower to file is entitled to an award. There are exceptions to the rule, however. One of those exceptions includes whistleblowers that file different claims against the same defendant.
In this case, it appears there are slight nuances to the overbilling allegations of each claimant. Karol is claiming that L-3 billed for hours worked on unproductive activity while Martin claims the company billed for the time employees were present on the site even if they were not yet working or had finished their tasks.
Although L-3 settled Martin’s False Claims Act case, it was not required to admit to any wrongdoing. Admitting wrong doing means there is bigger chance of being debarred (banned) from future government contracts.
We encourage people who have knowledge of procurement fraud and are sitting on the fence to give us a call. We can help you evaluate your claims, assess the risks and be the first to file if that is what you choose.
MahanyLaw – America’s Whistleblower Lawyers