The Department of Justice just announced that it has intervened in a lawsuit in which it is alleged that Inchcape Shipping Services Holdings Limited and its subsidiaries (Inchcape) violated the False Claims Act (FCA) by knowingly overbilling the U.S. Navy for ship husbanding services from 2005 to 2014. The lawsuit was brought under the whistleblower provisions of the FCA by former employees of Inchcape. Under the Act the government may intervene in the case, as it has here. The case is captioned United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al., No. 1:10-cv-01109 (D.D.C).
Inchcape is a government contractor that provided food and other subsistence items, local transportation, waste removal, telephone services, ship-to-shore transportation and force protection services to Navy ships at ports in several regions throughout the world. The lawsuit alleges that Inchcape knowingly overbilled the Navy by submitting invoices that overstated the quantity of goods and services provided, billed at rates in excess of applicable contract rates and double-billed for certain goods and services.
While the government joins very few False Claims Act lawsuits each year, when it does it typically signals trouble for the defendant. Indeed, when a whistleblower brings an FCA action, the government intervenes about 20% of the time. But those cases in which the government intervenes account for the vast majority of the recoveries. In short one thing is clear: government intervention is the surest indicator of potential recovery in an FCA case.
Lindsay Simmons is responsible for the contents of this Short Take.
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