A federal appeals court has reversed the dismissal of a U.S. Justice Department lawsuit alleging Bollinger Shipyards lied about the hull strength of eight U.S. Coast Guard cutters the boatbuilder had lengthened.

The U.S. maintained the Lockport, La., yard submitted false data about the 110' Island-class patrol boats (WPBs) that were stretched to 123' in a project costing $80 million. The modified vessels, which Bollinger built originally, were ultimately deemed unseaworthy and taken out of service.

The government’s allegations were sufficient enough “to allow a fact finder to infer that [Bollinger] either knew that their statements were false or had a reckless disregard of their truth or falsity,” judges at the U.S. Court of Appeals for the Fifth Circuit, New Orleans, said in an opinion issued in late December. 

 In October 2013, U.S. District Judge Sarah Vance dismissed the suit, saying the government presented no facts that Bollinger deliberately lied. In its appeal, the U.S. argued that it clearly described the alleged fraud and offered ample data to support its allegations.

Bollinger wanted the false data results “high enough to avoid further Coast Guard scrutiny and ABS [American Bureau of Shipping] review of the vessel’s structural integrity,” the U.S. said. 

The appeals court said the lower court “erred by viewing the facts in the light most favorable to Bollinger and drawing inferences against the United States.”

Citing the original complaint, the judges said the yard submitted the highest of three calculations to the Coast Guard, while using the middle calculations in its internal documents. “Finally, even after the Coast Guard expressed concern over the section modulus of 5,232 and Bollinger represented that it would have ABS review the calculation, Bollinger did not have ABS do so.”

Federal rules do not “require the United States to present its best case or even a particularly good case, only to state a plausible case,” the appeals court said in sending the case back to the lower court.

The court also said that because the Coast Guard continued paying Bollinger for the work after the first cutter’s failure was not a valid reason to dismiss the case at the time. That defense is “more proper at the summary judgment or trial stage.”

The U.S. filed suit in July 2011 under the False Claims Act, seeking $38.6 million in non-contract damages, which could be tripled to total nearly $120 million.

 “Since it’s an open case, we’re not providing any comment at this time,” said a spokesman for Bollinger, which was recently acquired by Galliano, La.-based Edison Chouest Offshore. Bollinger continues to build vessels for the Coast Guard. 

When the suit was first filed, the yard 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.”  — Dale K. DuPont