On January 30, the United States Attorney for Eastern District of Michigan announced that Merrill Technologies Group, Inc., and its subsidiaries will pay $5 million to settle charges that they violated the False Claims Act (FCA) “by falsely overstating cost or pricing data included in a subcontract proposal for work under a contract with the U.S. Department of the Army.”
As part of the settlement, a whistleblower who first brought forward the allegations against Merrill in a qui tam lawsuit is set to receive $900,000.
The government alleges that Merrill’s misconduct occurred in 2010 when its subsidiary Merrill Tool and Machine, Inc. (MTM) entered into a subcontract agreement with a government prime contractor who had agreed to manufacture and assemble components of upgrades to various armored vehicles for the U.S. Army’s Tank Automotive Command (TACOM).
According to the government, “MTM’s subcontract proposal overstated MTM’s cost or pricing data, thereby causing the prime contractor to negotiate and certify the prime contract with TACOM based on inflated costs, which in turn caused TACOM to pay overcharges at the prime and subcontractor levels.”
“Government contractors must be completely above board when seeking payment under government contracts,” said U.S. Attorney Dawn N. Ison for the Eastern District of Michigan. “This settlement demonstrates our commitment to hold accountable contractors who cause the Government to overpay, and who enrich themselves at taxpayer expense.”
Under the FCA’s qui tam provisions, whistleblowers with knowledge of government contracting fraud may file lawsuits on behalf of the U.S. government. In successful suits, qui tam whistleblowers are entitled to 15-30% of the government’s recoveries.
In this case, the qui tam whistleblower Chad Sibley is set to receive $900,000.
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”
Kohn sees the passage of the False Claims Amendments Act as one of the seven most urgently needed whistleblower reforms. National Whistleblower Center (NWC), where Kohn serves as Chairman of the Board, has issued an Action Alert calling on Congress to pass the bill.