It’s America, folks, and anybody can sue anybody over any dang thing. Allegations are as easy to make as typing up a complaint, handing it to the Clerk, and paying the filing fee. Allegations are easy; evidence is hard.

Evidence is what turns an allegation into a cause of action that leads to civil litigation and a large dollar value settlement. The proof, as they say, is in the pudding. Anybody can make an allegation, but it’s evidence that wins lawsuits. (Well, evidence and good lawyers. But we digress….)

Qui tam relators (or as they are sometimes called, “private attorneys general”) very often get a bum rap. Those “bounty hunters” that file lawsuits alleging violations of the False Claims Act typically get branded as disgruntled malcontents suffering from hallucinations and/or dementia. Too often they are vilified and castigated; sometimes they receive threats for their perceived disloyalty. Sometimes they are retaliated against by their employers for their whistle-blowing. (Note: it is a really bad idea for an employer to retaliate against a whistle-blower.)

This is not the first time we’ve waxed philosophic about qui tam relators and how their allegations are received and perceived by those who’ve found themselves cast in the role of “defendant” in False Claims Act (FCA) litigation. We wrote—

If the only people who filed qui tam suits under the FCA were disgruntled employees trying to get back at their (former) employers, then there would be no findings of liability and only the smallest of settlements. But that’s not the case. While many qui tam “relators” are, in fact, disgruntled, there is often some basis to their suits. We see this when the DOJ intervenes and the ensuing litigation leads to an enormous settlement. So the fact of the matter is that the emotional state of the relator is irrelevant to whether or not the Courts will find a sufficient factual basis to support a finding that the contractor violated its duty to submit accurate invoices to the U.S. Government.

All that being said, your company risks a qui tam suit every day. Every disgruntled employee is a potential relator. If you make your employees disgruntled, through your management actions (or inactions), then you increase the risk that one or more of them are going to file suit.

About three weeks ago (as this is written) Northrop Grumman learned that one of its ex-employees—a Program Manager—had filed a FCA suit as a qui tam relator. The suit, originally filed in 2009, was unsealed at the end of January because the DOJ declined to intervene.

We saw the article reporting the story and didn’t think too much about it. After all, government contractors are on the receiving end of multiple lawsuits all the time—just as most publicly traded corporations are. It seems that somebody is always alleging something, from wrongful termination of employment to sexual harassment to outright fraud. If we reported every allegation made against a government contractor that came to our attention, we’d do very little except report them. Which would be boring, both to you and to us. So we read the article and passed on the opportunity to report it.

Except it came up in another search today and some of the phrases seemed to leap from the page this time around, capturing our interest and (hopefully) distinguishing the allegations from the normal, run-of-the-mill, contractor fraud finger-pointing.

It’s not often we see the phrase “stole by playing accounting games” in a news article. We’d like to understand the alleged “accounting games” so that we might file them away for future reference. So we resurrected the article and gave it another look-see.

The relator alleged many things, including that Northrop Grumman promised to do “work that it never intended to do” in its proposal to DHS. In addition (according to the article)—

The company received a 25% profit on the follow-on contract, double the negotiated rate, according to the suit. The action also alleges company officials balked at coming up with improvements for commercial variants of antimissile systems because they recognized that ‘increased reliability would reduce Northrop's lucrative business of providing spares and replacements to the Department of Defense.’

We noticed that the relator was Northrop Grumman’s former Program Manager. Yes, it was the (former) PM who was dropping a dime with respect to his former program. According to the article, the (former) PM alleged that “in 2007 and 2008 the company intentionally inflated costs, presented false bills, lied about progress and withheld test data from the Department of Homeland Security.” Let’s be clear here: the whistle-blower was blowing the whistle on himself.

We did not see any allegations related to “accounting games” and so we left disappointed.  We noted that the Federal Rules of Civil Procedure, Rule 9(b), requires that allegations of fraud must be pled with particularity—i.e., that the relator “must identify at least one actual claim that was false, rather than simply describing a scheme to defraud.” (See this analysis.) On the other hand, it appears that the Supreme Court of the United States may have to decide the issue, according to this blog article.

We don’t presume to know whether or not this case meets the specificity test or not. But we do know that this case presents many of the elements of typical FCA litigation: a former employee, a set of allegations, expensive attorneys and their legal bills, and unfavorable newspaper headlines. Thus, regardless of whether Northrop Grumman ultimately prevails, it has already lost.