July 4, 2014 — A California federal court has approved a $22.5 million partial settlement in a multibillion-dollar federal and state False Claims Act case involving defective PVC pipes. Under the qui tam provisions of the federal False Claims Act, insider employees who notify the government by filing a lawsuit are eligible for a significant portion of the government’s recovery.
Whistleblower’s Qui Tam Lawsuit Alleged Manufacturer Knowingly Sold Defective PVC Pipes For State And City Water Systems
In 2006, a former engineer with JM Eagle, formerly J-M Manufacturing, filed a whistleblower lawsuit in federal court in California, alleging that the company intentionally manufactured and sold substandard polyvinyl chloride (PVC) piping to several states and 42 cities and water districts for use in sewer and water systems. Billing the government for products not provided or defective products costs American tax payers millions of dollars.
The lawsuit alleges that JM Eagle sold $2.2 billion worth of poor quality PVC pipe, which was marked with Underwriters Laboratories’ certification rankings, even though the manufacturer knew that its PVC pipe did not meet those standards. Because of the shoddy piping, many water and sewer systems allegedly were plagued with repeated ruptures and pipe failures. The Thousand Oaks, California municipal water district, for example, was forced to spend $4 million to replace its leaking piping system.
The whistleblower case was split into two parts and the company’s wrongdoing was the first issue tried. In November 2013, the jury unanimously found that JM Eagle had committed several False Claims Act violations by selling its defective pipe.
Before the trial began, the plaintiffs reached a $22.5 million settlement with Formosa Plastics, which once owned JM Eagle and had also been sued in the case. JM Eagle reportedly challenged the settlement, arguing that it was a paltry amount given the extent of the damages the plaintiffs are seeking in the whistleblower lawsuit. The federal court rejected this challenge. Now, in the second part of the trial, the jury will determine the amount of damages owed by JM Eagle to the plaintiffs. The $22.5 million Formosa settlement will not apply to cover JM Eagle’s liability for the plaintiffs’ harm.
False Claims Act Lawsuits Redress Abuse
The federal government does not have the time or the resources to uncover every fraudulent scheme against the government. But inside employees, like the one in this False Claims Act case filed in California, frequently are the first to learn about fraudulent claims. While Waters & Kraus is not handling this particular case, we are handling similar cases. If you have similar claims against a different company or contractor, contact us or call our attorneys at 800.784.0268. The qui tam lawyers with Waters Kraus & Paul, like Michael Armitage and Louisa Kirakosian in the firm’s Los Angeles office, are committed to safeguarding whistleblowers’ interests.
Contact us by email or call us at 855. 784. 0268 to learn how we can work together to notify the government about fraud and abuse.