Major Government Contracting Fraud Whistleblower Cases from 2024

During Fiscal Year 2024, qui tam whistleblower suits resulted in over $2.4 billion in recoveries, including major settlements alleging government contracting fraud.

Key Takeaways:

• Qui tam settlements from FY 2024 involved allegations of defense contracting fraud, making false statements during contract negotiations, and making false statements to obtain disaster relief funds.
• Qui tam cases accounted for more than 80% of the total False Claims Act recoveries for the year.
• If a qui tam lawsuit results in a successful settlement, the whistleblower is eligible to receive between 15-30% of the monies collected.

The False Claims Act’s qui tam provisions enable whistleblowers to bring forth suits alleging government contracting fraud on behalf of the U.S. government. For decades, qui tam whistleblowers have been critical in efforts to crack down on government contracting fraud and their suits have resulted in the recovery of billions of dollars of taxpayer funds.

2024 was no exception. In Fiscal Year 2024, qui tam whistleblower suits resulted in over $2.4 billion in settlements and judgements, accounting for more than 80% of the total False Claims Act recoveries for the year. 

While healthcare fraud remains the largest source of FCA settlements and judgements (with more than $1.6 billion of FY 2024’s recoveries stemming from Medicare and Medicaid fraud and other attempts to defraud federal healthcare programs), whistleblowers also played a leading role in exposing other forms of government contracting fraud, saving hundreds of millions of dollars for taxpayers.

After a whistleblower, also known as a relator, files a qui tam suit, the government has the opportunity to intervene and take over the case. Regardless, if a qui tam lawsuit results in a successful settlement, the whistleblower is eligible to receive between 15-30% of the monies collected.

Here are some major settlements from FY 2024 in which a whistleblower exposed government contracting fraud.

$70 Million Settlement with SSSI and Derco for Allegedly Overcharging Navy for Aircraft Parts

On June 21, the DOJ announced that Sikorsky Support Services Inc. (SSSI) and Derco Aerospace Inc. (Derco) agreed to pay $70 million to settle allegations of improper markups on spare aircraft parts sold to the U.S. Navy.

According to the government, “SSSI and Derco, which were both wholly-owned subsidiaries of the same parent company, knowingly entered into an improper cost-plus-percentage-of-cost (CPPC) subcontract. Under that contract, SSSI agreed to purchase parts from Derco at the cost that Derco paid other suppliers for those parts, plus a fixed 32% markup. SSSI, in turn, submitted cost vouchers to the Navy for reimbursement of the amounts it paid to Derco.”

“Government contractors must ensure their subcontracting arrangements comply with the law and with their contractual obligations,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.

The settlement resolves a qui tam whistleblower suit filed by Mary Patzer, a former employee of Derco. Patzer will receive nearly $14 million as her share of the recovery.

Gen Digital Pays $55 Million Judgment for Knowing Overcharges to General Services Administration

On December 2, the DOJ announced that Gen Digital Inc. (formerly known as Symantec Corp.) had paid $55.1 million after a four-week bench trial in which Gen Digital was found liable “for making knowing false claims to the United States when it mispresented its commercial sales practices during the negotiation and subsequent performance of a General Services Administration (GSA) contract.”

The government specifically alleged that Gen Digital “made false statements to GSA during contractual negotiations in 2006 and early-2007 and continued to falsely certify throughout the performance of the contract through Sept. 30, 2012, that its disclosures of its commercial sales practices were current, accurate and complete.”

“The United States deserves fair prices and accurate information from GSA contractors,” said GSA Deputy Inspector General Robert C. Erickson.

The case stems from a qui tam whistleblower suit filed by Lori Morsell, who administered the contract at issue for Symantec. Morsell’s share of the recovery has not been determined.

$11.8 Million Settlement with AECOM for Alleged Contracting Fraud Relating to Hurricane Katrina Relief

On October 24, 2023, the DOJ announced that Dallas-based engineering firm AECOM agreed to pay $11.8 million to resolve allegations that it knowingly submitted false claims to the Federal Emergency Management Agency (FEMA) for the replacement of certain educational facilities located in Louisiana that were damaged by Hurricane Katrina.

According to the government, “an AECOM project officer deployed to Louisiana for the Hurricane Katrina recovery effort submitted to FEMA fraudulent requests for disaster assistance funds for several educational facilities in New Orleans, which resulted in certain applicants receiving PA funds in excess of what FEMA rules permitted, including in some cases because the facility was entitled only to repair rather than replacement costs.”

“AECOM supervisors reviewed and did not correct disaster assistance applications that included materially false design, damage and replacement eligibility descriptions,” the government further alleges.

“FEMA plays an essential role in helping communities recover from natural disasters,” said Principal Deputy Assistant Attorney General Boynton. “Today’s settlement sends a strong message that FEMA contractors, as well as funding recipients, must provide truthful and accurate information so that FEMA’s resources are used to help those truly in need.”

The settlement resolved allegations brought forward in a qui tam suit by whistleblower Robert Romero, who is set to receive more than $2.4 million as his share of the recovery.

The claims asserted in this case are allegations only, and there has been no determination of liability.