The federal government has asked an appeals court to reverse the dismissal of its case against Bollinger Shipyards Inc. over the stretching of eight U.S. Coast Guard cutters, arguing that it clearly described the alleged fraud and presented ample data to support its allegations.
The U.S. attorneys also want to make oral arguments to “provide substantial assistance” to the court in understanding the issues in the case “involving millions of dollars of damages to the United States,” they said in an April 3 filing with the U.S. Court of Appeals for the Fifth Circuit, New Orleans.
U.S. District Judge Sarah Vance in October dismissed a two-year-old lawsuit against the Lockport, La., yard, saying the U.S. presented no facts “that allow the inference that Bollinger acted knowingly or with reckless disregard or deliberate ignorance of the truth” in the $80 million project.
The government maintained Bollinger submitted false data about the hull strength of the 110' Island-class patrol boats (WPBs) that were lengthened to 123'. The U.S. said Bollinger wanted results “high enough to avoid further Coast Guard scrutiny and ABS [American Bureau of Shipping] review of the vessel’s structural integrity.” The modified vessels, which Bollinger built originally, were ultimately deemed unseaworthy and taken out of service.
The government said its allegations were well documented and the judge erred in deciding whether it could prove its case.
“These allegations clearly describe fraud with the specificity required,” the government told the appeals court. “For example, the complaint details how Bollinger ran the section modulus calculation computer program multiple times in order to reach a figure high enough to persuade the Coast Guard to go forward with the project. The complaint alleges that to reach the 5,232-cu.-in. figure submitted to the Coast Guard, Bollinger increased one of the inputs 16,000 times greater than the amount used in the other calculations.”
The first cutter, the Matagorda, was delivered in August 2004. One month later, the crew discovered the vessel “had suffered a structural casualty that included buckling of the hull,” the U.S. said. A subsequent investigation by the Coast Guard and the prime contractor (Integrated Coast Guard Systems) “revealed that Bollinger had substantially overstated the section modulus representing the longitudinal strength of the hull.”
The Coast Guard subsequently accepted delivery of all eight vessels to make repairs and mitigate its losses, the government said.
Judge Vance cited the delivery issue in her dismissal. The Coast Guard “continued issuing payments for Bollinger's work for more than two years after the structural failure of the Matagorda,” she said. “These circumstances suggest that the government knew that the reported section modulus might be incorrect and was willing to pay anyway. There can be no FCA [False Claims Act] liability in such circumstances.”
The U.S. filed suit in July 2011 under the False Claims Act, seeking $38.6 million in non-contract damages, which could have been tripled to total nearly $120 million.
A Bollinger spokesman said that since the case is active, the company had no comment on the appeal.
After the October ruling, Bollinger president Chris Bollinger said in a written statement, “All of us in the Bollinger Shipyards family are gratified by the court’s thorough and well-reasoned decision dismissing with prejudice the Department of Justice’s allegations against Bollinger relating to our work on the Deepwater project.”
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.”
Bollinger continues to build vessels for the Coast Guard.
— Dale K. DuPont
