Union representative to share in False Claims Act settlement

Action challenged statements of compliance with prevailing-wage law; firms admit no wrongdoing

Daily Record Legal Affairs Writer//February 24, 2015

Union representative to share in False Claims Act settlement

Action challenged statements of compliance with prevailing-wage law; firms admit no wrongdoing

By Steve Lash

//Daily Record Legal Affairs Writer

//February 24, 2015

A union representative who blew the whistle on a Frederick-based federal subcontractor and other companies for allegedly lying to the government about paying prevailing wages to employees will receive a $72,000 share of the U.S. government’s $400,000 settlement in the False Claims Act litigation, said an attorney for the representative.

Jose de Jesus Frias, of the Mid-Atlantic Regional Council of Carpenters, alleged in the federal lawsuit that Cindell Construction Co. was among seven companies that falsely told the U.S. government they were complying with federal laws requiring the payment of prevailing wages to employees on federal contracts. Cindell and the other firms were performing renovation work in Reston, Va., at Patriots Park, the 731,000 square-foot headquarters of the Defense Department’s National Geospatial Intelligence Agency.

The companies admitted no wrongdoing in agreeing to the settlement.

“When contracting with the government, it’s important that taxpayer dollars are obtained honestly,” said Frias’ attorney, Brian J. Markovitz. “It’s important that people pay people properly what they are owed.”

The False Claims Act enables whistleblowers to bring suit against contractors that defraud the U.S. government and permits the Justice Department to intervene, which it did in Frias’ litigation. Under the act, whistleblowers can receive between 15 percent and 25 percent of the judgment awarded to the federal government as well as attorney’s fees and court costs.

The federal government can also be awarded triple damages under the law.

Frias, of Fairfax, Va., received an 18 percent share of the settlement.

Markovitz, who did not disclose the amount of attorneys’ fees reached under a separate agreement, said the case illustrates how the False Claims Act protects employees of federal contractors who believe they have been shortchanged.

“Unions and members should absolutely go the false-claims route,” said Markovitz, of Joseph, Greenwald & Laake P.A. in Greenbelt. “It is a very effective way to deter bad actors from continuing their underpayment of the wage.”

Cindell President Cynthia Barber did not return telephone messages seeking comment Friday.

The accord comes as the General Assembly considers legislation that would permit state and local governments to recover triple damages from public works contractors who defraud them and enable whistleblowers to collect up to 25 percent of the recovery.

Maryland Attorney General Brian E. Frosh has called enactment of the Maryland False Claims Act his top legislative priority this year. He is scheduled to testify in favor of the bill Wednesday before the Senate Judicial Proceedings and House Judiciary committees.

The legislation has failed in past years amid opposition from business groups that said it would spur frivolous lawsuits from would-be whistleblowers seeking a share of a judgment or settlement. The Senate bill is SB 374 and the House bill is HB 405.

According to Frias’ lawsuit, drywall workers at each of the companies complained to him about being paid significantly less than the prevailing wage and not receiving time and a half for overtime between 2010 and 2012.

The disparity between the prevailing rate and the wages paid reached nearly $20 per hour in at least one case, Frias alleged in the lawsuit filed Oct. 19, 2012, in U.S. District Court in Alexandria, Va. In many cases, the workers were paid $33 per hour, or 44 cents per hour below the prevailing rate.

However, the companies told the U.S. Labor Department they were complying with the Davis-Bacon Act’s requirement that federal contractors pay their employees the prevailing wage as set by the department’s secretary for the corresponding class of laborers and mechanics in the state, Frias alleged.

The motive for the false claims was financial: Weekly certificates of compliance with Davis-Bacon are required to receive payment from the federal government, the lawsuit stated.

In addition to Cindell, the named defendants in the case were Boston Properties Management Inc., which managed the Patriots Park property; Lend Lease Construction Inc., of New York; JRM Drywall & Finishing Inc., of Arlington, Va.; LFC Contractors Inc., of Alexandria; M&M Drywall Finisher Inc., of Manassas, Va.; and Lobo Handyman Inc. in Rockville.


Networking Calendar

Submit an entry for the business calendar