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LEGAL NEWSLINE

Thursday, March 28, 2024

Defendants in whistleblower cases should be wary of DOJ, attorney says

Kappelmanben

Kappelman

BANGOR, Maine (Legal Newsline) – Defendants in whistleblower cases face low but worrisome odds of Department of Justice intervention, such as in the Maine case of a roofing contractor who allegedly used non-compliant materials to renovate government buildings, a Minneapolis attorney says.

"DOJ’s intervention ensures that government lawyers with significant resources and expertise will be involved, which is bad news for a defendant," said Ben Kappelman, an attorney at Dorsey & Whitney in Minneapolis.

"Many lawsuits are filed by whistleblowers every year, however, and the government does not intervene in most of them."

The Maine False Claims Act case involving Roof Systems of Maine Inc. is on its way to be settled, according to a joint notice filed earlier this month in federal court. Roof Systems was a subcontractor at the former Brunswick Naval Air Station's National Guard installation, U.S. Navy’s Cutler Power Plant and the Portsmouth Naval Shipyard. The projects were active between 2010 and 2014.

The Bangor roofing company is accused of seeking payment from general contractors for work and materials that didn't comply with contractual specifications. The case initially was sealed.

The whistleblower in the case has since been identified as Brian Emery - the owner of Maine Roof Solutions, a subcontractor that had been hired by Roof Systems.

Emery, who was represented in the case by the law firm Constantine Cannon of Washington, D.C., claimed Roof Systems defrauded the government by violating industry standards and contract requirements.

Roof Systems will pay $439,500 to settle the whisteblower case, according to the settlement jointly. Both sides have until April 4 to complete the court's settlement procedure, at which point the case would be closed.

Roof Systems' former owner and President Kevin Griffin died Dec. 14, 2014, less than a month after the lawsuit was filed on Nov. 17. Roof Systems was sold earlier this year and its surviving company assets now go by the name Belcon.

Roof Systems also faces a Fair Labor Standards Act lawsuit filed by the U.S. Department of Labor in December.

Had it not agreed to the settlement in the whistleblower case, Roof Systems could have been in much more trouble, Kappelman said.

"A defendant in a False Claims Act suit can be liable for three times the government’s actual damages, plus up to an $11,000 penalty for each false claim submitted," Kappelman said.

"'False claim' has a broad meaning, so those penalties can add up quickly. These damages and penalties are potentially ruinous to a defendant."

While it's a worry for potential defendants, it can be quite attractive to potential whistleblowers, Kappelman said.

"Whistleblowers in False Claims Act suits can receive a percentage of the government’s recovery, which provides an incentive for employees of contractors to blow the whistle," he said.

The Roof Systems whistleblower case is not unique, Kappelman said.

"Cases like this are increasingly common," he said. "Potential False Claims Act liability is a risk for any contractor or subcontractor working on a construction project financed with federal funds.

"Having and following False Claims Act compliance policies can help limit potential exposure, but contractors need to take extra care when working on these projects."

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