December 9, 2013 Military Contractor Fraud

Dismissal Of Case Against Shipyard Shows Need For The Right Whistleblower Attorney

While we regularly report on the impact of healthcare fraud, misspending of taxpayer dollars is far more rampant than faulty invoices to Medicare. In fact, fraud by government contractors can be pinpointed in nearly every area of government contract. Without the help of whistleblowers, this fraud would go unchecked for years. In today’s story, we review a case against a prominent U.S. shipyard involving violations of the False Claims Act (“FCA”). Most recently, the case was dismissed by a federal judge for failure to properly plead the requirements of fraud. While the underlying issue has been hotly contested within the federal Circuits, the Eastern District of Louisiana has decided that the case against Bollinger Shipyards is ultimately worthy of dismissal.

As a review, engaging in fraud when handling federal funds, whether through grant money, monies advanced under a valid contract or monies reimbursed through federal programs, is a violation of the FCA and can result in civil and criminal penalties. However, these cases are highly complex and very technical, which is why you should always consult a whistleblower attorney if you believe you have original information of fraud involving government money.

Details of Case Against Bollinger

The case against Bollinger began in 2011 after years of investigations by federal and state authorities. The case surrounds the U.S. government’s Deepwater Program, which it was implementing along with the help of the U.S. Coast Guard. The program was designed to effectuate updates to the Coast Guard’s fleet of marine vessels, including its computer and communications systems. Bollinger was tasked with helping the government with structural engineering and other technical aspects of the project, in return for a sizable advance of money by U.S. taxpayers.

Allegations against Bollinger surfaced after the government uncovered evidence that Bollinger misled the Coast Guard and intentionally submitted false data about the strength of the Coast Guard’s cutters. At the time, Bollinger was lengthening these devices from 110 feet to 123 feet and refurbishing each.

On July 29th, 2011, the United States filed its original complaint against Bolinger. Shortly thereafter, the procedural headaches began to emerge, and the case against Bollinger became one re-filing after another. The government, which originally filed its lawsuit in the District of Columbia, was forced to relocate its prosecution to the Eastern District of Louisiana upon successful venue attacks by Bollinger. From there, the defendants moved to dismiss the case under the argument that U.S. prosecutors improperly stated their claim under the FCA or, alternatively, did not plead fraud with particularity as required by the Federal Rules of Civil Procedure. The court concurred, but allowed the government time to amend its claims.

From there, the U.S. filed its amended complaint, which defendants alleged still failed to meet the requirements of Rule 9. Bollinger contemporaneously reduced its exposure to liability by nearly $100 million in damages claims by securing victories in several discovery disputes (which ultimately resulted in sanctions against the United States).

In October of this year, Bollinger was successful in its second motion to dismiss, and the U.S. was not afforded an additional opportunity to amend its pleadings. In addition to deficiencies with the government’s pleadings of common law fraud, the Court opined that the FCA requires proof of knowledge at the time of the alleged fraud, which requires “actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information.”

Nonetheless, the U.S. failed to advance its claim and, according to the Court, failed to “alleged facts that allow the inference that Bollinger acted knowingly or with reckless disregard or deliberate ignorance of the truth.”

Avoid Procedural Hassles in Your Whistleblower Case

The legal technicalities described above are frustrating, rare and avoidable with the right whistleblower attorney. If you have original information of fraud, which can involve any cognizable set of facts, you are best served by speaking with a whistleblower attorney right away. For more information, contact Berger Montague today.

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