U.S. slams $9.2m fine on shipbuilder over false billing allegations

Huntington Ingalls Industries Inc.

U.S. government shipbuilder and defense contractor Huntington Ingalls Industries Inc. (HII) has agreed to pay $9.2 million to settle allegations that it violated the False Claims Act by knowingly over-billing the government for labor on U.S. Navy and Coast Guard ships at its shipyard in Pascagoula, Mississippi.

Under the settlement, HII will make an additional payment of $7.9 million which, combined with earlier repayments, will result in a total settlement of approximately $9.2 million.

The whistleblower in the case, a former HII employer, will receive a payout of $1.5 million.

The civil settlement resolves alleged labor mischarging on various U.S. Navy and Coast Guard contracts dating back to 2003.

According to the Justice Department, HII allegedly mischarged labor incurred on particular contracts to other contracts, even though the costs were not actually incurred by those contracts. The settlement also resolves claims disclosed by HII that it had billed the Navy and Coast Guard for dive operations to support ship hull construction that did not actually occur as claimed.

HII settled the case without a determination of liability in the case.

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement demonstrates, once again, that we will not tolerate defence contractors who falsely charge the armed forces or any agency of the United States.”

The settlement resolves allegations originally raised in a lawsuit brought by Bryon Faulkner, a former HII employee, under the qui tam, or whistleblower, provisions of the False Claims Act (FCA), which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Faulkner will receive $1,590,144 for bringing the mischarges to attention of the government. 

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