The Boeing Company has settled a whistleblower, or Qui Tam, lawsuit with the U.S. Department of Justice (DOJ) which alleged that Boeing improperly installed insulation blankets on KC-10 airplanes and overcharged the U.S. Air Force for services it provided. The $25 million False Claims Act settlement will be paid in cash and future in-kind work.

Settlement details

According to news reports, two former Boeing employees – Anthony Rico and Fernando De La Garza – filed a whistleblower lawsuit against Boeing alleging that its employees installed defective insulation blanket kits on KC-10 aircrafts and overcharged the U.S. Air Force for work it performed on the aircraft. The Defense Criminal Investigative Service, the Air Force Office of Special Investigations and the Defense Contract Audit Agency conducted an investigation and the DOJ later joined in the lawsuit.

Although Boeing did not admit liability, it agreed to settle the matter for $25 million – $18.4 million of which will be paid up front and the remaining $6.6 million will be paid by performing in-kind services to the Air Force which uses KC-10 Extender planes to refuel aircraft during flight as part of the United State's operations in Afghanistan and Iraq.

Whistleblowers generally collect anywhere from 15% to 30% of what was recovered. For their part in exposing Boeing's alleged fraud, both Rico and De La Garza will receive $1.3 million.

New laws help to reduce fraud

The Fraud Enforcement and Recovery Act (FERA) of 2009 was recently signed into law to to reduce abuse in federal programs. Part of FERA also expands the FCA by:

• Amending the whistleblower protections to employees, contractors and agents who suffer employment retaliation for reporting FCA violations and makes it easier for those individuals to pursue retaliation claims;
• Broadening the attorney general's ability to issue document subpoenas and authority to share those documents;
• Expanding the statute of limitation periods to give the government more time to decide whether or not it will intervene;
• Extending the law to apply to anyone who knowingly keeps a government overpayment without regard to whether or not the entity used a false claim to obtain the payment;
• Requiring those who violate the law to reimburse the federal government for the costs of the civil action.

If you believe that you have witnessed fraudulent activity against the government and would like a free Qui Tam case review by an experienced attorney, please click here.