The U.S. Department of Justice suit filed in July 2011 under the False Claims Act originally sought $38.6 million in non-contract damages, which could have tripled to nearly $120 million.
“Those who expect to do business with the government must do so fairly and honestly,” Benjamin Mizer, head of the Justice Department’s Civil Division said in announcing the deal in December. A copy of the settlement agreement said it is “neither an admission of liability by Bollinger nor a concession by the United States that its claims are not well founded.” It is a “compromise of disputed claims” to avoid protracted litigation.
Trial was set to begin in April in federal court in New Orleans, and U.S. District Judge Sarah Vance had ordered the sides to meet with an outside mediator this past July.
When the suit was first filed, the Lockport, La.-based shipyard said it had been “open and cooperative with the government” and tried to find a way to resolve the dispute outside of court, “but we are fully prepared to defend our good name aggressively in a court of law.” The lead attorney for Bollinger, now owned by Edison Chouest Offshore, could not be reached at press time.
The U.S. alleged Bollinger ran longitudinal strength calculations three times and provided the Coast Guard with only the highest and most inaccurate data for the 110′ Island-class patrol boats (WPBs) that were stretched to 123′. The vessels, originally built by Bollinger, were modified at a cost of $80 million under a contract awarded in 2002.
The case took a number of turns. Judge Vance dismissed the suit in October 2013, saying the government presented no facts Bollinger deliberately lied. The U.S. argued in an appeal that it clearly described the alleged fraud and offered ample data to support its claims. One month after the first cutter, the Matagorda, was delivered in 2004, the crew discovered the vessel “had suffered a structural casualty that included buckling of the hull,” the U.S. said.
Judges at the U.S. Court of Appeals for the Fifth Circuit agreed with the government in late 2014, noting the allegations were sufficient enough “to allow a factfinder to infer that [Bollinger] either knew that their statements were false or had a reckless disregard of their truth or falsity.”
Bollinger continues to build vessels for the Coast Guard.
Of the eight cutters decommissioned in 2007, two were transferred to Naval Surface Warfare Center Dahlgren Division and three others were scrapped at the Coast Guard yard in Baltimore in 2010, a spokesman said. The last three were to stay at the Maryland yard for inspection during the case, and then the Coast Guard could decide how to dispose of them. — Dale K. DuPont