Federal Military Contractor Agrees To Pay $3 Million To Settle False Claims Act Case

The federal government is taking action to crackdown on improper billing practices by contractors, particularly in the defense industry. On May 25th, 2022, the Department of Justice (DOJ) announced that HEYtex—a textile manufacturer with a main headquarters in Pulaski, Virginia—has agreed to pay $3 million to resolve a False Claims Act (FCA) lawsuit. The company allegedly sold fabrics to the Defense Logistics Agency (DLA) that did not meet standards. In this blog post, our Florida defense fraud lawyers provide an overview of the False Claims Act settlement.

Allegations: Virginia Textile Manufacturer Falsely Certified Fabrics Were ‘Military-Grade’ 

HEYtex USA is an international manufacturer of textiles and other similar products. It entered into a contract with the federal Defense Logistics Agency (DLA) to provide ‘military-grade’ fabrics to the government. There are certain standards that a fabric must meet in order to be certified as military-grade. The DOJ reports that tests were run on the fabrics produced by HEYtex USA.

However, the DOJ alleges that the former management of HEYtex USA falsely certified that the fabrics in question had passed the test when, in reality, they failed. In effect, this means that the contractor was billing the federal government for military-grade fabrics that it did not actually produce or deliver. HEYtex USA has agreed to pay $3 million to resolve the FCA violation. 

A Whistleblower Brought the Billing Fraud to Attention Through a Qui Tam Claim  

False billing by defense contractors remains a serious problem. One of the challenges is that it is difficult for the government to get the information that it needs to address these violations. The federal False Claims Act empowers individual whistleblowers—often but not always employees—to bring a lawsuit (qui tam action) on behalf of the government.  The False Claim Act enforcement action taken against HEYtex USA started when a whistleblower came forward with allegations that former management of the company had misrepresented the fabric testing and falsely certified (and billed for) its products as if they were military-grade.

As this case was initially brought by a whistleblower through a qui tam action, that whistleblower is entitled to receive a portion of the ultimate recovery ($3 million) by the federal government. The precise amount of whistleblower compensation has not yet been disclosed by the DOJ. Notably, in its press release, the DOJ commended the courageous act of the whistleblower who voluntarily came forward and provided critically important information to protect the best interests of U.S. taxpayers.  

Get Help From Our Defense Contractor Fraud Whistleblower Attorney Today

At Guttman, Freidin & Celler, our whistleblower rights lawyers have the professional skills and legal knowledge to help you navigate complex defense contractor fraud cases. If you have any specific questions about your legal rights, we are available to help.  Contact us today to set up your no cost, strictly private initial consultation with a lawyer. We provide nationwide legal representation to whistleblowers in False Claims Act cases.

Source:

justice.gov/usao-wdva/pr/united-states-attorney-chris-kavanaugh-announces-3000000-settlement-false-claims-act