David L. Haron announced that the United States had entered into a $1 million settlement with Payne & Dolan, Inc., a road construction firm headquartered in Waukesha, Wisconsin, which does business in Wisconsin and Michigan.
The case, US ex rel Todd Gervae and Michael Inman v Payne & Dolan, Inc., a Wisconsin Corporation (Case No. 2:03CV0153) (W.D. Mi.), was filed in 2001 by the law firm under the qui tam provisions of the False Claims Act, Title 31, United States Code, Section 3730 (b) -(h), on behalf of Todd Gervae and Michael Inman, two Upper Peninsula Michigan residents and former employees of the defendant. The False Claims Act, passed by Congress in 1863 to combat fraud during the Civil War, provides incentives to private citizens who discover fraud against the federal government and who bring their information to the government and then pursue the defrauding contractors. A qui tam lawsuit is an action brought by the private party seeking to represent the interests of a governmental entity under the federal statute that establishes damages and civil penalties for a violation of law, provides for recovery of the damages and penalties in a civil action, and if the action is successful, provides for the payment of a portion of the recovery to the party that initiated the action.
The settlement resolves allegations (which the defendant denies) that Payne & Dolan submitted false quality assurance and quality control data in connection with two federally-funded Michigan Department of Transportation (MDOT) projects in the Upper Peninsula: Asphalt paving projects on Maas Street in the City of Negaunee, Michigan and on US-41 near Baraga, Michigan (US-41 north of M-38 to the Houghton County line). Payne & Dolan's construction, testing, reporting and other activities were involved.
Payne & Dolan paid $440,000 to the USA (Federal Highway Administration--FHWA) representing damages with respect to Maas Street. Payne & Dolan also entered into an agreement with the State of Michigan (MDOT) to furnish materials and services, at no cost, in connection with repairs to 8.6 miles of US-41 (The estimated value of these repairs is between $500,000 and over $600,000). Payne & Dolan further established a Code of Ethical Conduct and Corporate Compliance which it must maintain along with an audit program.
The two former employees who initiated the suit were awarded a $140,000 share plus attorneys fees. Western District of Michigan United States Attorney Margaret M. Chiara and Assistant United States Attorneys Joan Meyer, Jennifer McManus and James Santelle litigated the case on behalf of the United States.