Boeing pays DOJ $4.4 million to settle qui tam suit alleging fraudulent billing

by Ben Vernia | January 20th, 2012

On January 20, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced the settlement of a whistleblower’s lawsuit brought against Boeing, alleging fraudulent billing in its Chinook helicopter program. According to the U.S. Attorney’s press release:

The Boeing Company has agreed to pay the United States $4,392,779.74 and to undertake several programmatic changes, resolving claims that Boeing improperly billed the Department of Defense for work at Boeing’s facility in Ridley Park, Pennsylvania. The settlement was announced today by United States Attorney Zane David Memeger, Direct James K. Podolak of the Army Criminal Investigation Division’s Major Procurement Fraud Unit (MPFU), and Special Agent-in-Charge Edward T. Bradley with the Defense Criminal Investigative Service (DCIS).

Beginning in approximately 2003, the United States Department of Defense awarded Boeing contracts to produce and modify Chinook helicopters as part of the Army’s effort to modernize its fleet of heavy lift helicopters. More than 100 new Chinooks were ordered, and Boeing also agreed to “remanufacture” several hundred older Chinook helicopters by overhauling their airframes to accommodate upgrades of the helicopter’s avionics and engines. The Ridley Park plant is the principal site where this work is performed.

The vast majority of the work performed in the Chinook remanufacturing program was paid based on a pre-negotiated price. The government’s investigation revealed that several Boeing managers instructed the mechanics assigned to the Chinook program to perform other, non-billable work while separately billing the United States for their time, resulting in the United States being charged for work for which it had already paid. The False Claims Act makes it illegal for any person or entity to present a false or fraudulent claim to the United States for payment and/or to retain overpayments that were improperly received.

The investigation did not reveal any quality-related problems or impediments to military efforts from this fraud. Boeing cooperated with the investigation.

To ensure that the problem does not persist at Ridley Park, the settlement requires Boeing to implement several independent remedial measures, including both retraining of its employees and technological improvements in the software Boeing uses to track its billing. Over the next few years, Boeing will also implement a new labor tracking computer system for its defense manufacturing facilities nationwide, and it has agreed to implement similar technological measures where appropriate to help ensure that a similar problem does not occur at other facilities.

The lawsuit was brought by a Boeing employee, according to Pietragallo Gordon Alfano Bosick & Raspanti, his attorneys:

Mr. DiMezza is represented by Marc S. Raspanti, Michael A. Morse, and Christopher A. Iacono, of the national whistleblower law firm of Pietragallo Gordon Alfano Bosick & Raspanti, LLP. Michael Morse, a former prosecutor and current chair of the law firm’s national whistleblower practice, applauded the courage and tenacity of Mr. DiMezza. “Mr. DiMezza has exhibited tremendous courage in blowing-the-whistle on the substantial overbilling by Boeing on the Chinook Helicopter Program. As a former United States Marine, Mr. DiMezza was especially disturbed that this overbilling repeatedly occurred on military aircraft of such importance to our men and women in uniform around the world. Mr. DiMezza, and the members of our firm’s whistleblower practice group, spent hundreds of hours working to expose this complex billing scheme and supporting all aspects of the government’s investigation. Today’s settlement would not have been possible without Mr. DiMezza’s courage and his refusal to simply look the other way.” United States Attorney Zane David Memeger likewise complimented Mr. DiMezza for coming forward in this case.

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