Contract Non-Compliance

KBR – Defense Contracting Fraud ($108.75 million)

Constantine Cannon represented whistleblowers Geoffrey Howard and Zella Hemphill Anderson in a False Claims Act case against defense contractor KBR Inc. that resulted in the largest settlement to date involving Iraq War fraud.  KBR agreed to pay the government $108.75 million, with the whistleblowers sharing an award of $31.5 million, representing a whistleblower share of 29% of the total recovered.  The whistleblowers alleged that KBR overcharged the U.S. government in connection with procuring supplies and materials to support U.S. troops stationed in Iraq and Afghanistan during the Iraq War. The relevant contract, pursuant to which the government reimbursed KBR for its costs plus profit, required KBR to make efficient use of taxpayer funds by “cross-leveling” before procuring new material, including by checking to see if KBR already had excess of the needed item available in-theater before buying more.  In their complaint, the relators, both of whom worked for KBR during the Iraq War, alleged that KBR’s failures to “cross-level” resulted in hundreds of millions of dollars in excess materials and overcharges to the government.  Press Release; Whistleblower Insider

March 27, 2023

Laboratory Corporation of America (“Labcorp”) has agreed to pay $2.1 million to settle a lawsuit by former employee Donna Hecker-Gross, who alleged that Labcorp overbilled the Department of Defense for genetic tests performed by a third party.  Under a 2012 contract, Labcorp was to perform laboratory testing for military treatment facilities worldwide, but certain specialized tests would be performed by subcontractor GeneDx.  However, when billing the Department of Defense for tests performed by GeneDx, LabCorp allegedly overcharged for them, double or triple billed for them, or billed for them even in the absence of evidence the tests were ever performed.  For initiating a successful enforcement action, Hecker-Gross will receive a $357,000 relator’s share.  USAO MD

August 2, 2022

VE Source LLC and its owners, Sherman Barton and Christopher Neary, as well as a related entity, Vertical Source LLC, have together agreed to pay nearly $8 million to resolve claims of violating the False Claims Act.  VE Source had fraudulently obtained more than $16.5 million in contracts with the Department of Agriculture (USDA) and the Defense Logistics Agency (DLA) that were set aside for businesses owned and controlled by service-disabled veterans, which it was not.  USAO NJ

July 1, 2022

Air France and KLM Airlines have agreed to pay $3.9 million to resolve their liability under the False Claims Act.  Under contracts with USPS, the airlines were required to submit scans showing when mail was transferred from their possession, but they submitted scans that falsely reported delivery times.  DOJ

June 30, 2022

Delta Airlines has agreed to pay $10.5 million to resolve allegations that it falsely reported mail delivery times under a contract with USPS in order to avoid penalties for mail delivered late or to the wrong location.  The settlement resolves Delta’s liability under the False Claims Act.  DOJ

May 25, 2022

Textile manufacturer HEYtex USA will pay $3 million to resolve an action brought by a whistleblower under the False Claims Act alleging that the company knowingly supplied fabrics to the U.S. military that failed to meet contract specifications, and falsely certified that its military-grade fabrics met specifications when, in fact, they had failed to pass required testing.  The whistleblower first reported the falsified test results to company management, but was initially ignored.  USAO WD Va