Several geothermal power plants connected to Ormat Technologies, Inc. have agreed to pay $5.5 million to settle a fraud complaint brought under the federal False Claims Act. That law allows a whistleblower who reports fraud or wrongdoing involving federal funds or programs to receive an award for their information. In this case, the two whistleblowers who brought the claim should receive between $825,000 and $1.65 million.
The case was originally filed in 2013 by Tina Calilung and Jamie Kell, both employees of the defendant, Ormat Technologies. The two women claimed that Ormat submitted false applications for federal clean energy grants. Ormat was the operator of several geothermal energy projects. Geothermal energy is heat from the earth. Approximately 25% of the electrical production in Iceland comes from geothermal power but its use in the United States is miniscule.
The Department of Justice did not intervene immediately in the case but later joined to approve the settlement. Despite not intervening right away, a federal prosecutor said “Ormat exploited the resources of the United States Government in order to finance one of the most expensive geothermal boondoggles in history, utilizing government money in an attempt to create a false appearance of function and profitability.”
Prosecutors say that Ormat received hundreds of millions of dollars from the government. Much of that was federal stimulus monies made available after the economy sank into a recession in 2008. Taxpayers spent $831 billion on the stimulus plan. The goal was to create jobs and invest in healthcare and green energy. Unfortunately, billions of those tax dollars were lost to fraud.
Ormat applied for and received monies under a clean energy grant program. The company claimed it could generate electricity economically using the heat of the earth. What little electricity that was produced, however, cost five to six times more than other geothermal power.
Instead of admitting the projects were a failure, Ormat lied about the results, apparently to avoid a five year grant recapture period. In other words, not only did their plants not perform as promised, they also lied to avoid paying back the money.
Ormat Technologies Faces Whistleblower Complaint
The case against Ormat was originally filed by two former employee whistleblowers. Tina Calilung was Ormat’s asset manager until she left in 2012. She says she left because the company’s business practices were “morally and ethically repugnant.”
Her co-relator (“relator” is the legal term for whistleblower), Jamie Kell, was an assistant to several of the company’s business development directors. When she developed breast cancer and had to take time off for treatment, she says the company began a campaign of harassment. Ultimately a security team was sent to her home to confiscate her computer. When she tried to return to work, she was escorted off the property by security.
Out of a job, Kell filed discrimination complaints with the Nevada Equal Rights Commission and the EEOC.
The treatment suffered by Kell and the behavior observed by Calilung motivated the two women to join forces and file a whistleblower complaint under the False Claims Act. That law allows whistleblowers with inside information about fraud to file a sealed complaint in federal court. If the government ultimately recovers money because of the inside information, the whistleblower can receive up to 30% of the recovery.
Calling the allegations “sprawling” and “irrelevant”, Ormat sought to dismiss the case. In court filing Ormat’s lawyers told the court,
“Recognizing the lack of merit to Relators’ charges, the Justice Department has declined to intervene. As shown below, the First Amended Complaint must be dismissed in its entirety. First, Relators lack standing and the Court lacks subject matter jurisdiction over these claims under two separate statutory bars. In addition, the claims are implausible on their face because Ormat made no false statements to the government.”
Fortunately, the court was unmoved by Ormat’s arguments.
We have frequently prosecuted cases where the government has not intervened and left it to us to prosecute. Sometimes prosecutors don’t take cases because they are simply too busy. The reluctance of the Justice Department to intervene is often not a reflection on the merits of the case.
Status of the Case and Takeaways
Ormat Technologies is a wholly owned subsidiary of an Israeli company. Although the company settled, there are other parties still in the case. Depending on how the remainder of the case goes, Kell and Calilung may be eligible for additional reward monies. Awards are based on the total recovery. If monies are recovered from the remaining defendants, the awards will likely increase.
The biggest takeaway in this case is how companies treat their workers. Many employees only seek outside help if their complaints about illegal behavior are ignored or if they are mistreated. This case is a perfect example of both. Would Kell still have participated in the whistleblower case had she not been harassed? Would Calilung have filed if the company stopped its illegal behavior? It’s hard to know but based on our experience, ignoring and mistreating employees is an invitation for trouble.
How to Claim a Whistleblower Award
To claim a whistleblower award, you first need inside information. The law requires that you be an original source of the information. If your information comes from the media, a government regulatory proceeding or your “husband’s brother in law who works down at the plant,” you probably do not qualify as an original source.
Next, you generally must be the first to file. In this case, both relators (whistleblowers) cooperated and joined forces. In many cases, however, it is only the first to file that gets the award.
Finally, you must file a sealed complaint in federal court. For that, you need an attorney, one well versed in False Claims Act work. Don’t be frightened at the prospect of hiring a lawyer, most lawyers that do this work do so on a contingent fee basis meaning you do not pay legal fees or costs unless they are successful in recovering money for you.
MahanyLaw – America’s Whistleblower Lawyers