Shell Oil Company Pays to Settle Allegations of False Claims for Environmental Clean-Up

Shell Oil settling over allegations of false claims

Shell Oil is one of several oil companies settling with the Commonwealth of Massachusetts for requesting reimbursement of environmental cleanup costs despite receiving the same reimbursement from private insurers.
Image source: Wikimedia Commons

In a recent case out of Massachusetts, oil giant Shell has agreed to pay $4 million to the Commonwealth in order to settle claims it improperly billed for environmental cleanup services. We have reported in the past on the importance of state-level false claims acts, which often work to supplement the efforts of the federal government in bringing fraud to justice. While this case involves only the efforts of the Massachusetts Attorney General and its investigative forces, it highlights the effectiveness of this type of anti-fraud legislation on both levels of government.

Much like the federal FCA, the Massachusetts False Claims Act punishes those who knowingly present a false or fraudulent claim for approval to the Massachusetts government. Whistleblowers may receive rewards between 15 and 25 percent depending upon the extent of the relator’s involvement and contribution to the prosecution of the action.

Shell Oil Receives Windfall Under Massachusetts Environmental Protection Act

Massachusetts has maintained a fund known as the Underground Storage Tank Petroleum Product Cleanup Fund meant to help gas stations meet environmental standards with regard to the underground storage of harmful chemicals and petroleum. The fund was set up to expedite the efforts of station owners to move their properties into compliance before further environmental damage is done. It offers reimbursement for any remedial costs to station owners provided those owners are not receiving insurance proceeds for the same clean-up costs.

According to allegations, Shell Oil had received sufficient funds from its insurers for the cleanup of over 100 gas stations around the Massachusetts area, yet sent a bill for the services for reimbursement from the Cleanup Fund. Under the provisions of the applicable Massachusetts laws, gas stations are required to disclose if they receive additional funding for the cleanup of underground petroleum tanks and, if they have, are required to return the proceeds to the Fund for use on other stations in need of assistance.

Response from Attorney General Coakley

Massachusetts Attorney General Martha Coakley took none-too-kindly to Shell Oil’s attempt to receive double payment for cleanup services at the expense of Massachusetts taxpayers. In a statement, she reiterated, “This program exists to help station operators clean up harm done to the environment, not for big oil companies to profit by double-dipping….I want to thank the Department of Revenue and the UST Fund for their continued cooperation in our efforts to determine whether these companies may have sought or recovered money from their insurers without proper disclosure.”

Under the terms of the settlement, Shell Oil will repay $1.9 million to the Trust and $2 million to the Commonwealth of Massachusetts directly. The Commonwealth also recently settled with several other big oil companies for similar misconduct, including Sunoco and Texaco, who each repaid $2.2 million and $1.7 million, respectively.

Fraud Is Always Lurking

In what seemed like an honest, good faith effort to engage in environmental consciousness, several big oil companies were engaging in fraud, deceit, and profiteering at the expense of unsuspecting taxpayers. If you are aware of fraud and would like to speak to a whistleblower attorney, contact Berger Montague today!

By | 2018-03-27T09:06:01+00:00 March 28th, 2014|Environmental Fraud|