A federal judge has rejected Chrysler’s attempt to dismiss a qui tam lawsuit alleging that the automaker defrauded the U.S. government by wrongfully denying powertrain warranty coverage on government owned vehicles.

The Chrysler whistleblower lawsuit was filed on behalf of the United States by the whistleblower in federal court in Chicago under the qui tam provisions of the False Claims Act in 2012.

The qui tam plaintiff, or whistleblower, William C., filed the qui tam lawsuit against Chrysler while working as a warranty service administrator for Dodge dealerships in Chicago. He claims Chrysler provided false statements regarding powertrain warranty and labor coverage on certain vehicles sold to the government prior to July 2007.

According to the qui tam lawsuit, Chrysler allegedly committed government fraud by failing to cover parts and vehicle repairs for 2004 to 2006 model year under the powertrain warranty.

Additionally, Chrysler is accused of submitting false claims, denoting that certain parts did not fall within the warranty coverage, even though the warranty stated the specified coverage of these parts, even after the 36,000-mile mark.

Federal District Court Judge Robert M. Dow, Jr. found that the complaint adequately alleged that Chrysler made false statements that powertrain warranty coverage on certain vehicles had expired when in truth the warranties were still valid.  This caused the government to pay for repairs that should have been covered under the warranty.

“The causal chain here is simple: The dealership either collects payment from the customer or the manufacturer, and if defendant tells the dealership that it’s not paying, then the charge goes to the customer,” Judge Dow stated. “Therefore, defendant caused the dealerships to present claims for payment to the government by telling the dealerships that the vehicles in question were not under warranty.”

Whistleblower Protection

In a whistleblower lawsuit, an individual with knowledge of an organization’s activities provides information about fraud, corruption or other illegal activity. Whistleblowers are often employees, former employees and others who have access to company documents and internal information.

When an employee is witness to fraud committed by their employers, whether it be government fraud or health insurance fraud, the Whistleblower Protection Act protects the reporting employee from retaliation or adverse action.

Part of the Whistleblower Protection Act ensures that the qui tam lawsuit is filed “under seal,” meaning that it is kept secret from everyone but the government to give the Justice Department time to investigate the allegations. Even the person or entity being accused of fraud is not told about the whistleblower allegations.

Additionally, under the qui tam provisions of the False Claims Act, if the government recovers money because of information a whistleblower provides, the whistleblower will receive a portion of the funds.

Typically, the whistleblower receives 20 to 30 percent of the amount recovered. In many states, similar laws reward those who blow the whistle on fraud against the state government.

If you have evidence of fraud against the government or corruption at a private company, an experienced qui tam attorney can investigate your claim and advise you on your options.

The Chrysler Qui Tam Lawsuit is Case No. 1:12-cv-02870, in the U.S. District Court for the Northern District of Illinois.