Delta Air Lines agrees to pay over $8 million to settle allegations that it violated the False Claims Act through misuse of funds from the Department of the Treasury’s Payroll Support Program (PSP). The alleged misconduct was brought to light by a qui tam whistleblower lawsuit filed by Dr. Herbert Remidez, Jr. As part of the settlement announced on July 15, the whistleblower award Remidez will receive is over $850,000.
The PSP was passed by Congress as part of the Coronavirus Aid, Relief, and Economic Security Act in March of 2020. It provided funds to allow airlines and contractors to continue to pay their employees’ wages and benefits during the pandemic when air travel was halted. The program restricted the amount of funding that could be paid to officers and employees whose annual compensation was greater than $425,000. The settlement agreement resolves allegations brought by Remidez that Delta provided compensation exceeding the PSP’s limitations to some highly paid employees and officers. It also resolves allegations that it misrepresented the compensation its employees received to the Department of the Treasury.
The False Claims Act’s qui tam provisions play a crucial role in fighting fraud against the government. It enables private individuals like Remidez Jr. to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers, also referred to as “relators,” are eligible to receive whistleblower awards of between 15% and 30% from the government’s recovery.
“When companies accept federal assistance, especially generous pandemic-relief funds like those at issue here,” said U.S. Attorney Theodore S. Hertzberg for the Northern District of Georgia, “They owe a duty to the American people to respect the conditions placed on those funds.” In this case, a whistleblower familiar with Delta’s finances was integral to ensuring that Delta would face consequences for failing to respect these conditions.”
During FY 2024, settlements and judgments under the False Claims Act exceeded $2.9 billion, and over $2.4 billion of the recoveries stemmed from qui tam whistleblower lawsuits. According to the government, a record 979 qui tam lawsuits were filed in FY 2024.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
