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BREAKING NEWS – $5 Million Settlement in the Case of U.S. Ex. Rel. Palombo

I’m happy to report that the Defendants are paying $5 million to settle the allegations raised in the case of U.S. Ex. Rel. Palombo v. PAE, Inc.

Robert J. (“Bob”) Palombo filed the case under the False Claims Act, of course. While Pacific Architects and Engineers LLC or “PAE” has admitted no fault in paying to settle the matter, I can still say that Mr. Palombo fits the description of a true whistleblower. This is why it was my pleasure to work with him for four years to bring his allegations to light.

After Mr. Palombo was hired by PAE to work on filling positions in programs to support state Department missions in Afghanistan, Haiti, Lebanon and South Sudan, Bob became upset when he felt personnel were not being screened properly. He felt the contracts required discipline checks and developed references.

Mr. Palombo also obviously felt the risks of hiring people who were not properly screened were serious. Unlike the way most people think when confronted with difficult situations like this, Bob also felt that he had a duty to try and fix this problem.

The False Claims Act’s anti-retaliation provisions also allow plaintiffs to sue for retaliation suffered when they attempt to prevent their employer committing fraud against the government. PAE said they fired Mr. Palombo in a reduction in force. Nonetheless, Mr. Palombo received an additional settlement for his retaliation claim.

In this particular case, the system does appear to have worked. We worked with an aggressive U.S. Attorney who was determined to ensure that the allegations were investigated. The allegations themselves are serious and were taken as such by the government.

I think it is fair to say that it is a little unusual these days for a False Claims Act case to obtain a settlement in a non-health care case. If you read any blog about the law you know that health care related claims take up as much as 80 percent of the False Claims cases in the country. That’s fine in one sense, we all want to prevent fraud in health care of course.

However, the False Claims Act should not become limited in its application. Government contracting is important and we should expect that when the facts warrant it such cases can and should be brought under this law. The settlement, in this case, shows that is possible.

Most importantly, it is my hope that regardless of any settlement or fault, all parties to hiring people to work in such sensitive positions, will now ensure that such employees are screened appropriately.

If you would like to know more about the case, read the Department of Justice press release, my firm’s press release, and an article from Law 36O.