On July 28, 2014, Matson Navigation Company, Inc. (Matson), Hawaii’s largest container shipping company, agreed to pay the U.S. Government $9.95 million to settle allegations that they violated the False Claims Act (FCA) by improperly billing the U.S. Department of Defense (DOD) for ocean fuel surcharges.  The whistleblower that brought the case, Mario Rizzo, an Illinois freight consultant, is entitled to $2.5 million, which represents his share of the settlement for reporting fraud against the government – in this case, overcharging the DOD.  In addition, $950,000 of the $9.95 million will cover his court costs and attorney’s fees.

Mr. Rizzo originally filed the lawsuit under the whistleblowers provisions of the FCA, which is one of the most effective methods that the government has implemented for combating fraud.  Under the FCA, any person who knows of an individual or company that has financially defrauded the federal government can file a “qui tam” lawsuit to recover damages on the government’s behalf.  Mr. Rizzo filed this particular lawsuit on behalf of himself and the DOD.  Additionally, a whistleblower who files a case against a company that has committed fraud against the government, may receive compensation for up to 30 percent of the settlement. In this case, Mr. Rizzo’s share of $2.5 million is approximately 27 percent of the settlement.

According to the qui tam lawsuit filed in the U.S. District Court in California in 2010, Mr. Rizzo and his attorneys alleged that Matson and Horizon Lines, a subcontractor for Matson, violated the FCA when they improperly billed the DOD for transporting military cargo and household items by ocean when, in fact, a portion of the cargo was shipped by rail.  Matson and Horizon Lines denied these allegations, claiming that as subcontractors, they were not subject to government’s terms of carriage which limits the application of fuel surcharges on inland and overland freight charges.  These claims did not hold water for Matson, and charges against Horizon Lines are still pending.

If you or someone you know has information concerning a potential case involving an individual or company knowingly overcharging the government, do not hesitate to take action. It is possible that you might be able to bring your own qui tam lawsuit under the False Claims Act, acting as a whistleblower on behalf of the US government.