Double dipping – the dictionary defines the practice as “obtaining an income from two different sources, typically in an illicit way.” Thanks to an alert whistleblower, Shell was caught with its hands in the cookie jar and will lose not only $150 million in reimbursement monies but also must pay a $20 million penalty. The whistleblower will get to enjoy millions in award monies too.
California has spent billions of dollars cleaning up leaking underground storage tanks. The California State Water Resources Control Board operates a fund to help clean up efforts. Under the Board’s rules, a property owner can receive up to $1.5 million per leaking tank from the fund.
Two cents of every gallon of gas sold in the state goes to the Board as reserves for future cleanup costs. Since its inception in 1989, the Board has paid out over $3.5 billion in cleanup costs.
As a major gasoline retailer, Shell has stations throughout California. According to the whistleblower’s lawsuit, Shell has been getting money from the state even though it has insurance for leaking storage tanks. In essence, Shell was double dipping.
The state had its suspicions as early as 2007 but it wasn’t until a whistleblower lawsuit in 2010 that the scam really came to light. Now that the Shell has been caught, it still must clean up 100’s of other leaking tanks but will not get any state funds. It also has to pay back the state for monies it already received. In total, the price tag to Shell is estimated at $170,000,000.00.
And the whistleblower who reported the scheme? That is a company from Florida known as American Cost Recovery Management LLC. They will receive an award of approximately $3.4 million.
Shell isn’t alone in this scheme. Two other big oil companies have also been caught, Chevron which paid $1.3 million and BP which paid $7.9 million.
California residents are lucky to have a state False Claims Act that pays whistleblowers a percentage of whatever the state recovers from wrongdoers. Just over half the U.S. states have a similar whistleblower law but many are limited to Medicaid.
Whistleblower claims come in all sizes, shapes and forms. The common thread to successfully receiving an award is that the claims must involve government funds or fraud on a government program. That means residential mortgages (FHA loan guarantees), government contractor fraud, defense department spending, Medicare, Medicaid and yes, underground storage clean up funds. Whistleblower claims can also be “reverse false claims” that involve companies hiding violations to avoid paying fines.
As this case shows, companies can be incredibly greedy. (If the average person did this they would likely go to jail.) Whistleblowers have much better morals and are usually smarter and than the fraudsters, however. That is why they are so successful as the government’s first line of defense against fraud.
Under the federal and state False Claims Acts, whistleblowers are entitled up to 30% of whatever the government collects plus enjoy robust protections against retaliation.
Need more information? Give us a call. Our whistleblower clients have received over $100 million during the last 5 years.
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