False Claims Act Case Against Shipping Company Heats Up

Just when you thought you had heard it all comes a case that seems so obvious we really should have heard of something like it already.

According to whistleblowers and the government, who has joined the suit against Covan World Wide Moving Services, the defendant overcharged the U.S. armed forces by putting their thumb on the scale. Covan is a shipping company, and they are accused of telling workers to “get weights up” and overbill. Since they were billing the government, they are liable under the Federal False Claims Act.

Now the False Claims Act was created to fight fraud committed against the armed forces way back in the Civil War. I don’t know if back in the 1860s they charged for shipments by the pound, but I guess the idea of shipping nothing for something is not exactly new. It’s why we need a False Claims Act in the first place.

This method for the alleged fraud does not sound all that new or sophisticated either. The two whistleblowers claim they were ordered to falsify weight certificates. What is especially encouraging, and somewhat new, is how fast the case appears to be headed to trial. 

The South Carolina court has it tentatively scheduled for trial in April of 2015, a mere three years after the case was filed in 2012. That is practically a record for a False Claims Act case. By contrast, I know of a case going to trial this year also involving defense contractors that is older than most third graders.

In this case, the U.S. Attorney has filed for intervention and the case came out of seal in November of 2013. We’ll be watching to see if the government and the whistleblowers can make their case. It’s not a small matter at all by the way. The company apparently shipped more than $700 million in freight, or at least charged for shipping more than $700 million in freight since 2009.

I guess we’ll have to watch what happens in the trial to see how much of that involved shipments of actual freight and how much if any was because somebody created extra weight that did not exist.

Anthony C. “Tony” Munter represents the courageous individuals who report fraudulent claims made against federal and state government agencies.  Mr. Munter has extensive experience in using the so called qui tam provisions of state and federal False Claims Acts to protect the rights of whistleblowers who want to stop fraud. For more information, contact Mr. Munter’s DC law office.