Yesterday, it was announced that a $61 million settlement was unsealed between the Department of Justice and RPM International and its subsidiary, Tremco, Inc., in Medina, Ohio for false claims it submitted for payment to the government between 2002 and 2011.
Often, due to the precise procedure of false claims lawsuits, such enforcement actions go without public notice because they are filed “under seal”. The act of sealing a lawsuit protects the sensitive information (e.g. the identity of the relator/whistleblower) and it can be years after a lawsuit is resolved before the case is unsealed.
“The False Claims Act does much to protect whistleblowers and provides incentives to help encourage individuals with information to come forward and disclose that they suspect a company is submitting false claims for payment to the government,” commented Christopher Paulos, an attorney with the Levin, Papantonio law firm who practices in the areas of qui tam or whistleblower and False Claims Act litigation. “Despite these incentives and protections, it is often still necessary to protect evidence and sensitive information in a sealed lawsuit while the claims are being investigated by the government .”
In the RPM suit, the vice president of Tremco, Inc., Greg Rudolph, resigned from his position and to report the scheme to the government. For his efforts, Rudolph will receive 17.9% of the $61 million settlement.
“Without whistleblowers, dishonest practices that cheat the government and taxpayers out of billions of dollars every year, would go undeterred,” Mr. Paulos continued, “whistleblowers have proven time and again to be the single most effective fraud fighting tool available to honest taxpayers.”
Despite the positive gains for the government and taxpayers under the False Claims Act, there are many that would desire to see the False Claims Act returned/forced in(to) impotency. As the RPM/Tremco suit was unsealed yesterday, the U.S. Fifth Circuit Court of Appeal’s decision on “implied certification”, which now gives corporations more leeway to evade civil liability for fraud under the False Claims Act. So long as they can show that no laws or regulations exist that would require them to accurately report or certify their performance on a government contract, particularly if the falsity of the claim cannot be found on the face of the request for payment, corporations will be free to wrongfully siphon funds from the public treasury with impunity.