Friday, June 20, 1997
Fluor settles whistleblower's suit for $8.4 million
Engineer accused cleanup firm of bilking U.S.

BY MIKE GALLAGHER
The Cincinnati Enquirer

Fluor Daniel Fernald has agreed to pay $8.4 million to settle a federal whistleblower lawsuit that alleged the company bilked taxpayers out of more than $92 million in the cleanup of Fernald.

The settlement is the largest in history for a whistleblower case that was litigated by private attorneys and not the U.S. Justice Department, according to Justice Department officials.

Judge S. Arthur Spiegel approved the settlement Thursday evening after lawyers for Fluor Daniel Fernald, the U.S. Justice Department and whistleblower William Watt signed it.

Mr. Watt, 59, of Augusta, Ga., a former Fluor Daniel Fernald project control engineer, filed a federal False Claims Act and retaliation lawsuit Dec. 6, 1993. He alleged the company "committed fraud" between 1992-95, by creating phony financial and performance reports that hid wrongdoing such as:

Charging materials, design work, labor and administrative costs to unauthorized government control and charge accounts. Submitting false claims for millions of dollars on behalf of companies that teamed up with Fluor Corp. - Fluor Daniel Fernald's parent company, to obtain the Fernald contract.

Improperly allowing travel advances to various employees. Charging the government for unapproved or unallowed expenses. The company has charged the government more than $1 billion since it was awarded the five-year, $2.5 billion contract in 1992 to manage the cleanup at the former uranium-processing plant.

Preparing a 1993 plan for cleaning up Fernald that was filled with phony data and later rejected by the Energy Department as unworkable. Failing to meet minimal accounting standards or adhere to government accounting regulations resulting in inflated charges to the Energy Department.

Retaliating against Mr. Watt because he spoke out against and tried to stop the "fraudulent abuses by (Fluor Daniel Fernald)." Mr. Watt, in an earlier interview, said he resigned from the company in January 1995 because he could not abide by the "blatant fraud and wrongdoing being practiced on a regular basis by (Fluor Daniel Fernald)."

Had the whistleblower case gone to trial under the federal False Claims Act, Fluor Daniel Fernald officials could have been ordered to pay triple damages - $276.6 million - if a judge or jury had found them liable.

In signing the agreement, neither Fluor Daniel Fernald nor its teaming partners (Haliburton NUS, Jacobs Engineering and Nuclear Fuel Services Inc.) admitted to any wrongdoing at Fernald. Mr. Watt's Cincinnati lawyers - Stanley Chesley, Phyllis E. Brown and W.B. Markovits - issued a statement Thursday, saying: "Bill Watt feels that the settlement vindicates his charges brought against Fluor on his own behalf and on behalf of U.S. taxpayers. He hopes this sends a message that there needs to be greater government oversight of its contractors."

As part of the settlement, Fluor Daniel Fernald insisted that Mr. Watt's lawyers be prohibited from holding a news conference to discuss the settlement.

Fluor Daniel Fernald President John Bradburne, in a written press release Thursday, said: "This finally brings an end to a very disturbing attack on the integrity of our operations. We have vigorously investigated these claims, found no wrongdoing and spent nearly $2 million in our defense."

Mr. Bradburne said the company decided to settle "because (it) was becoming far too costly to litigate and had become a distraction to the company's principal mission, namely the safe cleanup of the Fernald site."

Mr. Bradburne also cited adverse publicity about Fernald as another factor in the company's decision. He added that Fluor and its teaming partners would jointly pay the settlement.

In a series of articles since February 1996, The Enquirer revealed financial mismanagement by Fluor, lack of government oversight and other problems in the cleanup. As a result of the articles, the U.S. Government Accounting Office investigated the project. In May, the Energy Department stripped Fluor of a major part of the project, citing findings of the GAO that confirmed The Enquirer reports.

Under the agreement, obtained by The Enquirer, the $8.4 million will be divided as follows:

  • $1.7 million off the top will go to Mr. Watt's lawyers for fees and expenses.

  • Mr. Watt will receive $3 million for the retaliation portion of the lawsuit.

  • Of the remaining $3.7 million, the government will take 71 percent, or approximately $2.6 million, as its portion because the case was filed as a federal False Claims Act. Under law, the federal government is entitled to a portion of any money awarded in a False Claims Act brought against a federal agency. Simply stated, Mr. Watt filed his lawsuit on behalf of the taxpayers and the federal government. Mr. Watt will receive an additional $1.073 million, (or 29 percent) of the $3.7 million as his share of the False Claims Act portion of the settlement. Mr. Watt will share a part of his total award with individuals who assisted his case, according to his lawyers.

As part of the final settlement, Fluor and its teaming partners agreed not to try to get the $8.4 million reimbursed to them, directly or indirectly, from any federal agency or department.

However, in a related development, a U.S. Department of Energy lawyer told Judge Spiegel that it would be virtually impossible for the department to know whether Fluor or its teaming partners try to recover the $8.4 million costs from taxpayers by incrementally billing the cost back to the department through various invoices.

The Energy Department lawyer, Beth Osheim, made the comment on June 12 during a meeting in a telephone conversation with Judge Spiegel in the presence of the lawyers, according to case records. Judge Spiegel angrily chastised Ms. Osheim for the Energy Department's inability to provide adequate oversight at Fernald and protect taxpayers' money, the case records show.

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