GE Hitachi Settles False Claims Act Case Involving Nuclear Energy

The False Claims Act has proven useful in helping to promote honesty across several industries. While most often used within the healthcare fraud context, the FCA was recently employed against technology and energy giant GE Hitachi with regard to false statements and misrepresentations made pursuant to securing a grant from the Department of Energy. Under the FCA, private whistleblowers with original information of fraudulent activity can file a lawsuit in federal court against a defendant.

The federal government then reviews all claims under the FCA and may decide to intervene upon its discretion. If the lawsuit is successful, the whistleblower can receive up to 30 percent of the amount recovered on behalf of taxpayers.

Details of United States ex rel. Dandy v. General Electric Hitachi Nuclear Energy Americas LLC, General Electric Company

The Dandy case involves allegations of fraud stemming from federal money advanced to GE for purposes of developing and building an advanced nuclear Economic Simplified Boiling-Water Reactor. From 2007 through 2012, approximately half of the money used to design the reactor was provided by the Department of Energy (“DOE”). The project was supervised by the Nuclear Regulatory Commission (“NRC”), which is responsible for ensuring all nuclear equipment complies with government regulation and safety laws.

According to the whistleblower complaint, GE intentionally hid certain details about the reactor that may have impacted its approval by the NRC and its funding from the DOE. Specifically, the complaint alleges that GE lied about a component of this type of reactor known as a steam dryer. This part removes the water droplets from steam produced by the nuclear reaction in reactors using boiling water for energy. Under NRC rules, makers of nuclear reactors and their components must apply for and receive nuclear reactor design certification confirming that the steam dryer, which creates strong vibrations, will not damage the surrounding nuclear plant.

Allegedly, GE knew about design flaws in its steam dryers and falsely submitted documentation for certification that did not include the damaging information. Further, allegations reveal that GE claimed to have analyzed the steam dryer and its safety when, in fact, it had not.

Following the government’s decision to intervene in the case, GE opted to settle the claims for $2.7 million. The whistleblower in this case, a former employee of GE, has received an unspecified amount.

According to the NRC’s Office of New Reactors:

“The Nuclear Regulatory Commission supports the settlement and appreciates the Department of Justice’s close coordination during its investigation of these allegations….The NRC continues to rigorously review the … [GE] application in order to reach a final design certification decision, ensure compliance with NRC regulations, and protect public health and safety.”

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