A lawsuit brought against Austal USA in June 2014 was unsealed by a federal judge Tuesday — revealing multiple allegations of falsified claims submitted to the U.S. Navy, which contracts Austal to build two ships in its fleet.
Three claims suggest the shipbuilder knowingly violated the False Claims Act, which the plaintiffs — some of whom are former employees — say “is widely practiced” at Austal via the Labor Metrics software the company uses to report back the Navy.
One claim accuses Austal of billing the Navy for “supervision time” or work performed by supervisors that many employees say was allegedly performed by welders, some of whom were listed as “supervisors” on their timesheets.
Contracts between the Department of Defense and Austal for the production of both the Littoral Combat Ship (LCS) and the Joint High Speed Vessel (JHSV) include specific requirements defining the number of people in each trade class and company rank permitted to work on each vessel. Each rank position is also limited on the amount of time that can spent on a certain vessel.
Additionally, Austal’s compensation increases along with the ranks. For instance, Class B welders make less than Class A welders. Work billed as “supervisor time” allows Austal to receive higher compensation from the Navy than it would for work performed by a welder.In the complaint, several Class A welders are listed as plaintiffs. Though he wasn’t alone in the complaint, one plaintiff said he noticed in 2012 that the description of “production MMF Supervision” was listed on his timesheets even though he was employed and compensated as a welder.
“Though he applied for and was qualified to be in a supervisory position, Relator Two was not in a supervisory position and was not paid as if he was,” the complaint reads. “This is contrary to how (Austal) was billing the United States Government and contrary to the government was compensating (Austal).”
The same employee, Relator Two, is African American, similar to other welders “incorrectly” listed as supervisors in employee data ultimately turned over to the U.S. Navy.
According to the complaint, listing African American employees as supervisors not only brings in more “compensation” from the Navy, but also allows Austal to show that it satisfies both the total number of supervisors and the number of minority supervisors required in its federal contracts. In addition, the complaint claims Relator Two was qualified and applied for a supervisory position, but was not promoted.
The complaint also suggests Austal routinely bills work incorrectly, to obscure the total time spent completing certain portions of projects. One plaintiff, identified as Relator One, claims to have witnessed several instances of work being “closed out” before a portion of production was actually complete.
“Projects assigned to the modular manufacturing facility, an early part of production, were routinely closed out in the billing system when the time budgeted to the project by the Navy had all been used even though the work was not completed,” the complaint alleges. “The work would then be completed in Final Assembly, a later state in production, and billed to projects that the U.S. Navy had budgeted to final assembly.”
According to lawyers for the plaintiffs, that “intentional misallocation of time and financial resources” has cost the Navy additional money and had a constraining effect on the financial resources available for other ongoing projects at Austal.
According to the complaint, three employees — who are now plaintiffs — misreported time to the company’s human resources department in November 2011, emphasizing that a supervisor was instructing his subordinates to make incorrect entries regarding which specific vessel they were working on.
One of those employees claims that after making the complaint, his work began to be “scrutinized in ways it had not been previously” by the very supervisor he mentioned in his complaint to human resources. Then, in April 2012, the employee was terminated by Austal for “lack of work” in the “Fit Out Group” he was assigned to.
According to the complaint however, multiple individuals were employed within the same group after his termination from the company. The complaint also lists two additional employees who were terminated or “compelled to resign” after making complaints about falsified entries into the Labor Mechanics software program.
One employee said he too was terminated due to a “lack of work,” and a third was compelled to resign after making “an improper verification of a design drawing” — something the plaintiff said had been tolerated by Austal on several occasions, prior to complaining about the misleading work reports.
The complaint alleges that all three instances were “in retaliation.”
In false claims cases the U.S. Government is allowed to intervene as a plaintiff, but is not required to. In late February, representatives of the Department of Justice filed a motion declining intervention in the case. A 2011 false claims case against Mobile’s Infirmary Health Systems ultimately resulted in government intervention and a $24.5 million settlement for the plaintiffs. As an incentive for whistleblowing, law allows civilian plaintiffs to collect a portion of settlements in false claims cases.
Lagniappe communicated briefly with a spokesperson for Austal USA, but so far, the company not responded to allegations in the complaint that were made public this morning.