Honeywell International Hit With $45 Million False Claims Suit

Litigation involving the False Claims Act (“FCA”) often invokes complex civil procedure challenges. For this reason, FCA cases tend to take significantly longer than other types of cases and may require several motions, hearings, and discovery requests. An FCA case begins when a plaintiff, also known as a whistleblower, relator, or qui tam plaintiff, files a complaint alleging fraud in  a U.S. District court against a corporation or group of entities. From there, the U.S. government has the opportunity to intervene in the case, thereby triggering its investigative powers and significantly greater resources to unearth evidence of misconduct. The road from U.S. intervention to ultimate settlement or verdict, however, can take years to transverse and is generally punctuated with several legal battles.

In a current case involving Honeywell International, Inc., a global conglomerate dealing in various commercial or consumer goods, aerospace systems, and engineering, the Ninth Circuit reversed the District Court’s dismissal of a qui tam lawsuit and addressed a pressing jurisdictional issue raised by the defense. In the defense’s argument to the trial court, it questioned whether the qui tam lawsuit was valid and alleged certain facts relied upon the plaintiff were previously disclosed to the public, implicating the public disclosure bar.

Agreeing with the defense, the District Court dismissed the case for lack of jurisdiction. However, the Ninth Circuit recently revised the cause of action, holding the plaintiff’s reliance on an Army Audit Agency report and a report from the Government Accountability Office did not bar recovery under the public disclosure doctrine and the information may be considered a valid original source.

Facts of the Case Against Honeywell

In Thomas Berg et al. v. Honeywell International, Inc., et al., the relator accuses Honeywell of making “intentional miscalculations” to meet certain energy saving provisions in its contract with the U.S. Army. The suit, filed by a U.S. Army Alaska engineer, asserts that Honeywell doctored energy cost baseline data in order to meet the demands of its contract to install energy efficient lighting at Fort Richardson and Fort Wainwright, both located in Alaska.

The work involved revamping the old system, which relied upon central heating and a power plant, to a new system using natural gas and electricity from local suppliers. The contract required Honeywell to document the energy costs before the conversion in order to compare overall energy. If the data revealed no tangible economic benefit to the transfer, the contractor would not receive payment.

The problem with the relator’s case is that a U.S. Army Audit Agency conducted an investigation of the energy cost savings, operation and maintenance costs and concluded that Honeywell inaccurately calculated these figures. As well, Honeywell admitted in a 2006 memorandum that its claim of energy savings would be met with shortfall, but inaccurately claimed the government would be responsible for part of the costs of the underperformance.

These prior disclosures, according to the defense, should bar a subsequent qui tam action under public disclosure doctrine. However the Ninth Circuit held that the AAA reports, while technically available to the public, were not actually available and disclosed to the general population. More specifically, the reports would have been made available under the Freedom of Information Act, but not one single request was made at any point prior to the litigation.

Experienced Whistleblower Attorneys Can Protect Against Procedural Mischief

Procedural strategy like that described above is not uncommon in civil litigation, particularly that involving multi-million dollar fraud claims. If you are considering coming forward with evidence of misconduct or fraud, speak to a whistleblower attorney right away. Oftentimes, complex defensive strategies are designed either to delay litigation or create undue hardship for the plaintiff. Fortunately, a competent and experienced whistleblower attorney can meet these attempts with a sound legal response – hopefully resulting in a similar result as that described above.

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