Whistleblower Disclosure Leads to $4.6 Million Penalty for Fraudulent Construction of Nuclear Facility

Energy & Process Corporation (“E&P”) agreed to pay $4.6 million to settle False Claims Act allegations of fraud related to a contract to construct a Department of Energy (“DOE”) nuclear waste treatment facility.

The government alleges E&P knowingly failed to perform required quality assurance procedures and supplied defective steel reinforcing bars. E&P had a contractual duty to supply rebar that met stringent regulatory standards for the Mixed Oxide Fuel Fabrication and Reactor Irradiation Services facility in the DOE’s Savannah River site. However, E&P not only failed to perform most of the quality assurance measures, but falsely certified they had performed the quality controls. Furthermore, the government alleges that one-third of the rebar supplied was defective.

“Compliance with contract requirements is expected by all who contract with the U.S. government, but is especially critical in connection with the construction of a nuclear facility,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

Deborah Cook, the whistleblower and former employee of the prime contractor that subcontracted with E&P during the construction, supplied vital information to the government leading to this settlement. Her portion of the award is to be determined.

The False Claims Act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. The False Claims Act is one of the most powerful tools to combat government contract fraud. Violators of the False Claims Act are liable for three times the dollar amount that the government is defrauded and civil penalties of $5,000 to $10,000 for each false claim. A qui tam plaintiff can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or a settlement. Whistleblower must file a qui tam lawsuit to be eligible to recover money under the FCA. Merely informing the government about the violation will not qualify you for an award.

 The $4.6 million to be paid by E&P to resolve the government’s False Claims Act lawsuit is in addition to the replacement costs incurred by E&P.

 Related Links:

• DOJ Press Release:  Energy & Process Corp. Settlement
• False Claims Act Whistleblower Resources