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$2.8M False Claims Act Settlement for Retention of Overpayments from Tennessee Valley Authority

Thursday, May 5th, 2016

Greene LLP announces the $2,800,000 settlement with Bartlett Holdings, Inc. of False Claims Act allegations that it wrongfully retained overpayments from the Tennessee Valley Authority for work expanding a nuclear power plant on the Chickamauga Reservoir in Tennessee. As part of the settlement, Greene LLP’s qui tam whistleblower client will receive $616,000, representing a 22% relator share.

Bartlett was a subcontractor performing professional engineering and other services for the Tennessee Valley Authority’s addition of a second reactor at the Watts Bar Nuclear Plant, paid pursuant to a “cost plus” government procurement contract. The False Claims Act suit alleged that Bartlett was pre-paid for payroll taxes and other estimated costs, but that it failed to return overpayments representing the difference between those estimated costs and the actual payroll taxes and insurance costs paid.

An accountant, the relator was employed by a firm that performed an audit of the Watts Bar project financials. As part of the audit, the relator examined detailed payroll files, and his firm shared the results of his audit in 2012. As alleged in the complaint, the audit concluded that $1,645,574.99 in pre-paid payroll taxes for the year 2010 had not been returned to the TVA as required. By the time the False Claims Act case was filed in May 2014, the relator came to believe that Bartlett had not been required to return the overpayments he had identified.

Because the TVA is a wholly owned government corporation and instrumentality of the United States, wrongful retention of overpayments from it can be actionable under the False Claims Act. As a so-called “reverse false claims” case brought under 31 U.S.C. § 3729(a)(1)(G), the allegations of a violation relied on Bartlett’s affirmative duty as part of its contract to perform regular reconciliations to return anticipated overpayments to the TVA.

“The United States is not a business partner to be trifled with,” said Thomas M. Greene, who represents the relator. “Fraud against any government agency, even one as independent as the Tennessee Valley Authority, can carry stiff penalties—and there’s always someone that knows it’s happened.” The relator was also represented by Michael Tabb, Tucker Greene and Ryan P. Morrison, also of Greene LLP. The work of the TVA Office of Inspector General and the U.S. Attorney’s Office for the Eastern District of Tennessee were instrumental in completing the investigation and effecting settlement, particularly that of Assistant United States Attorney Robert McConkey, and Charles A. Kandt, Counselor to the Office of Inspector General.

Greene LLP is a complex civil litigation firm in Boston of seven attorneys, specializing in representing qui tam whistleblowers in False Claims Act litigation with a low-volume, high-attention approach. Each of the firm’s partners have over twenty years of experience in whistleblower litigation, pioneering innovative theories of recovery and litigating to $1.2 billion in government recoveries, including nearly $500 million for claims for which the government declined to intervene.

$500,000 Settlement of Customs Duty False Claims Act Case

Monday, January 26th, 2015

Greene LLP announces an agreement with Green Bag, Co. to settle allegations that it underpaid customs duties on designer bags it imported from China. The suit was filed in 2012 after nine months of investigation by the qui tam relator and Greene LLP attorneys Thomas M. Greene, Michael Tabb and Ryan P. Morrison. It alleged that Green Bag underreported cost of goods in order to pay correspondingly low customs duties. The False Claims Act settlement provides for $500,000 to the United States, and the whistleblower will receive a 20% relator’s share of that recovery. In addition, the defendant agreed to pay statutory fees and a significant breach of contract settlement to the relator.

Greene LLP filed the case in the Northern District of California with the help of local counsel. Once the case was filed, Assistant United States Attorney Sara Winslow spearheaded a multi-agency investigation into the alleged fraud.

“We believe fraud on the government through avoidance of customs duties is a lot more pervasive than people realize,” said Thomas M. Greene. “Our investigation suggests that many companies use a variety of techniques to either improperly reduce the customs duties they pay, or to avoid paying them altogether.” In the case against Green Bag, the False Claims Act whistleblower alleged that the defendant essentially kept two sets of books. One set tracked the company’s true cost of goods overseas so that its manufacturers could be paid, and in order to claim the proper business deductions. The second was fabricated solely for the purpose of underreporting cost of goods to United States Customs and Border Protection personnel.

Although relatively few customs cases have been successfully pursued under the False Claims Act, several types of fraud in avoiding tariffs have been the subject of whistleblower cases. “Falsely stating the country of origin to avoid paying duties can be actionable,” said Ryan P. Morrison. “Misclassifying goods to get a lower duty rate can also lead to False Claims Act recoveries for the government and qui tam whistleblowers.”

In some ways, underreporting cost of goods may be the easiest way for a company importing goods to avoid paying the correct customs duties. As the Green Bag case revealed, there are export entities in China that stand willing to provide United States companies with two sets of invoices. With seemingly complete documentation, Customs and Border Protection has no way to determine directly that the importer actually paid more for the goods abroad. Whistleblowers, therefore, will play a key role in curbing customs fraud.

“With the proliferation of government spending, there is really no limit to the number of ways that the government can be defrauded,” said Greene. “With new kinds of fraud comes new kinds of False Claims Act cases, and we think customs fraud will become an important way to recover money owed to the government.”

Greene LLP is a complex civil litigation firm that specializes in representing qui tam whistleblowers in False Claims Act litigation. Its partners each have over twenty years of experience in False Claims Act litigation, with a track record of successes in defense and health care industry cases.

Thomas M. Greene Again Named to Super Lawyers List

Tuesday, October 30th, 2012

In a repeat of last year, Greene LLP Managing Partner Thomas M. Greene was named to the 2012 New England Super Lawyers list.  The distinction is conferred on up to 5% of attorneys, using criteria that include verdicts and settlements, experience, honors and awards, and scholarly lectures and writings.

Greene has been profiled by Super Lawyers in a piece entitled “Unprecedented Success Representing Whistleblowers,” which includes a brief description of the novel theory first used by Greene in Franklin v. Parke-Davis, a False Claims Act case settled in 2004 for a combined $430 million in civil fines and criminal penalties.  Since that time, over $12 billion has been recovered by the government through the use of Greene’s novel off-label promotion theory of recovery.

The Super Lawyers recognition follows a string of other honors and awards for Greene.  After selection as a finalist for the 2011 Public Justice Trial Lawyer of the Year award, Greene received an AV rating by Martindale-Hubbell in which Greene received a 5.0 out of 5.0 in Peer Rating under a new rating system, receiving perfect scores in legal knowledge, analytical capabilities, judgment, communication ability, and legal experience.

Greene LLP’s $14.5 Million Settlement Among the Largest Settlements in Massachusetts

Monday, January 23rd, 2012

Following a year in which the firm’s $142 million RICO verdict was the second biggest in Massachusetts, Greene LLP again registered a case on the 2011 leaderboard of top recoveries published by Massachusetts Lawyers Weekly (subscription only link here). The firm’s $14.5 million settlement of a False Claims Act case involving Detrol was the largest whistleblower case in the state in 2011.

The Detrol case against Pfizer was pursued under the False Claims Act’s qui tam provision, which allows persons with knowledge of fraud on the government to sue on the government’s behalf.  Although in many situations the government exercises its ability to intervene in such cases, the Detrol case was pursued without government intervention and was litigated entirely by Greene LLP attorneys.  On the Lawyers Weekly list, the $14.5 million settlement ranked third among government cases.  When compared with other verdicts and settlements obtained by private attorneys, the settlement obtained by Greene LLP attorneys in the Detrol case would also rank third in the state in 2011.

“Litigating the case was a group effort,” said lead attorney Thomas M. Greene.  “We didn’t abandon the case once the government declined to intervene, like many other firms tend to do with False Claims Act cases.  The fact that we won a settlement among the highest in the state is a testament to the investigative lawyering of our entire team.”