California State Court Orders New Trial Following California False Claims Act Verdict

Recology in False Claims Act case

San Francisco-based Recology, a waste management company, is facing possible liability for inflating the weight of its reimbursable recyclable trash collection.
Image source: Wikimedia Commons

California, along with many other states, maintains its own False Claims Act statute that closely mirrors the language of the federal version. The lengthy, comprehensive, statute allows private individuals to file claims under the Act if that person has original knowledge of the submission of a false claim to any government entity in the state of California. It has proven especially helpful in combatting fraud involving Medi-Cal (the state’s Medicaid program), charities, consumers, business issues, and natural resources.

In today’s case, we examine a recent holding by a San Francisco trial court demanding a retrial of a hotly-contested matter involving the City and County of San Francisco with regard to waste management and recycling services. Despite a $1.3 million jury verdict against the defendant, the court ultimately decided there was insufficient evidence presented during the trial phase to warrant the verdict, and ordered a new trial.

Details of McVeigh, et al. v. Recology, et al.

The McVeigh case began upon the filing of a whistleblower lawsuit by a former employee of Recology, Inc., a waste management and recycling services provider serving the San Francisco area. According to the complaint, Recology maintained two buy-back centers in the San Francisco area wherein residents could bring recyclable materials in exchange for cash. Recology also collected recyclable material from other sources, including businesses and industrial centers, which it compiled and commingled with the recyclables collected at the buy-back center. The goods were then hauled away by a third-party transporter and sent to a recycling center. Recology was then reimbursed by the Department of Conservation for the recyclables it collected, which it documented on official forms requiring the exact weight of the items collected.

Allegedly, beginning in September 2005, Recology employees were routinely engaging in “tag inflation,” which involves exaggerating the weight of recyclable materials in order to garner a higher reimbursement from the Department of Conservation. Despite significant pushback from his employer – and several negative performance reviews – the relator began closely monitoring the buy-back weights. Immediately, the per diem collection rate dropped from $13,00 to $7,000. He thereafter commenced a whistleblower lawsuit, alleging the false submission of invoices for reimbursement based on inflated and exaggerated trash collection. His lawsuit also alleged falsification of documents certifying the amount of non-recyclable trash being sent to area landfills.

Jury Verdict and Reversal

Following a lengthy trial, the San Francisco jury arrived at a $1.3 million verdict against Recology, finding it had defrauded the government by submitting false claims for reimbursement. Shortly thereafter, Recology filed a motion for judgment notwithstanding the verdict, a motion which requests that the judge find for the defendant despite the fact the jury sided with the plaintiff-relator. In the judge’s order, which was entered on October 24, 2014, the judge found that there was not enough evidence presented at the trial for the jury to make its conclusion. Specifically, the court held that there was no proof presented at trial that the City of San Francisco’s money was involved in the reimbursement to Recology or that the City’s resources were involved in the alleged fraudulent transactions in any way. For this reason, the judge ordered a new trial with regard to the City of San Francisco’s involvement in the False Claims Act issue.

Contact Berger Montague Today

If you are aware of fraud involving a government contractor or a state-level agency, our office can help! For more information about the False Claims Act, please contact Berger Montague today!

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By | 2018-03-25T13:57:00+00:00 December 9th, 2014|Contractor Fraud|