The False Claims Act is a piece of federal legislation, created by Congress in the mid-1800’s, that permits private individuals to file a cause of action on behalf of the U.S. government based on allegations of fraud or misspending of federal tax dollars. As we have reported in the past, the U.S. Department of Justice is within its discretion to either intervene in the case on behalf of the private plaintiff, or allow the plaintiff to proceed with the investigation on an individual basis. Either way, the qui tam provisions of the FCA allow the plaintiff to recover up to 30 percent of any amount recovered from the defendant. However, the plaintiff’s case must be strong enough to withstand the introduction of contrary evidence or appeals by the defendant, who is usually a large, powerful corporate conglomerate.
In a case decided early last week, JM Eagle, the world’s largest manufacturer of plastic pipe products, announced its intent to immediately appeal a federal jury’s finding of liability under the FCA. The trial lasted seven weeks and included testimony from 20 witnesses. At its conclusion, the jury determined that JM Eagle had, in fact, defrauded U.S. taxpayers by supplying substandard pipe products pursuant to a government contract. At this time, it is unclear the exact amount JM Eagle is expected to owe following this verdict against its favor.
Breach of Contract
JM Eagle is a global leader in PVC pipe production. At the crux of its case, the whistleblower and several government agencies asserted that JM Eagle manufactured and shipped millions of PVC pipes that did not conform to industry standards, despite language in the government contract requiring otherwise. In fact, an attorney for the whistleblower commented that the jury must have concluded JM’s sole focus under the contract was to produce as much pipe as possible without concern over quality or safety.
However, counsel for JM Eagle offers a contrary opinion in light of the verdict, and has vowed to immediately appeal to the Ninth Circuit Court of Appeals. Specifically, JM contends it presented “irrefutable evidence” during the trial that its PVC products did indeed meet industry standards and the jury’s verdict could not possibly be supported by the weight of the evidence presented at trial. In addition, JM finds it alarming that the whistleblower in this case, a former JM Eagle employee, was fired for attempting to engage in an unlawful kickback scheme. Defendants further argue that several government-funded inspections revealed that its PVC piping did meet standards and did not present a safety or quality issue.
To further add to the confusion, several states and the federal government, both of which originally joined the whistleblower in this litigation, suddenly dropped out over concerns of insufficient or contradictory evidence. The whistleblower proceeded to trial along with Nevada, New Mexico, Virginia and 42 local governments and municipalities. Despite JM’s contentions, Nevada Attorney General Catherine Cortez Masto stated that pipe installed by JM has already failed across the state and must be replaced soon – a “budget nightmare.”
Evidence is Key in any Whistleblower Case
If you suspect misconduct at your place of work or by any individual holding a government contract, you are encouraged to seek the services of an experienced whistleblower attorney. At the beginning of your case, it is unlikely you will have compiled sufficient evidence to win against the corporation. However, do not let this discourage you from pursuing your claim as there will be plenty of time to collect evidence as you prepare for settlement or trial. For more information about the process, contact Berger Montague today.