RPM and Tremco Pay Over $60 Million to Settle False Claims Act Lawsuit

September 16, 2013 — State and federal governments are important customers for many of the nation’s businesses. Unfortunately, some companies cheat the government — and the taxpayers — by failing to abide by the terms of their contracts. The federal False Claims Act allows insiders or employees to collaborate with the government by filing a whistleblower lawsuit for the government’s benefit. Under the qui tam language contained in the statute, informants may share in any recovery.

Whistleblower’s Share Tops $10 Million in Case of Roofing Contract Overcharges

RPM International Inc., an Ohio company, and its subsidiary, Tremco Inc., have settled a False Claims Act lawsuit brought against the two companies by Tremco’s former vice president, Gregory Rudolph for government contractor fraud. Tremco manufactures a variety of construction products and provides related services. The whistleblower lawsuit alleged that Tremco submitted false claims to the General Services Administration (GSA) relating to two multiple award schedule (MAS) contracts for roofing materials and services. The two companies have paid $60.9 million to settle the lawsuit.

The GSA MAS program gives government agencies a way to purchase routinely used commercial goods and services on a streamlined basis. The program can be quite lucrative for government contractors, which receive the same streamlined access to hundreds of government purchasers under just one contract. The catch is this: contractors must disclose their commercial pricing practices if they wish to be awarded an MAS contract.

Government Contractor Fraud Allegations

According to the DOJ, between 2002 and 2011, Tremco intentionally failed to provide GSA with information concerning its commercial sales practices. Tremco allegedly did not disclose changes in discounts the company gave to comparable commercial customers and did not extend the same discounts to government purchasers. The government customers, as a result, paid excessively high prices for Tremco’s products and services. Tremco is also alleged to have misled government purchasers by marketing generic products as a superior product and using a defective adhesive component in the company’s roofing products.

The whistleblower in the case, Rudolph, will receive over $10.9 million as his portion of the federal government’s recovery under the settlement. The agreement does not resolve claims brought for the benefit of several states under their own state false claims statutes.

Qui Tam Lawsuits Fight Fraud by Government Contractors

Many instances of False Claims Act violations by government contractors are brought to light in a whistleblower lawsuit similar to the one filed in this case. Tipsters deserve to understand their rights and protections under the statute. Waters & Kraus, with a national reputation for its whistleblower practice, has offices in Texas, California, and Maryland. Contact us by email or phone our qui tam lawyers at 855.784.0268 to learn how we can advance your interests throughout the process.

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