Mountain States Contractors LLC has agreed to settle massive whistleblower lawsuit after being hit with a number of government contract fraud allegations.

The settlement amounts to $2.25 million to resolve the allegations in the whistleblower lawsuit that the company falsely billed the government for funds to work on a federal highway.

The highway was reportedly completed by Mountain States contractors but their payroll had been temporarily transferred to a subcontractor who participated in the the U.S. Department of Transportation (USDOT) minority contracting program.

The government took action in the whistleblower lawsuit stating that Mountain States Contractors LLC had agreed to settle a former employee’s claims.

“Fraud schemes like that committed by Mountain States harms the integrity of law-abiding, small business contractors trying to compete for contracts on a level playing field,” Marlies Gonzalez, regional special agent in charge of the DOT Office of Inspector General said in a statement.

The settlement will resolve the whistleblower lawsuit filed on behalf of government by relator Ron M. in 2012. Ron claimed that Mountain States falsely stated DBE subcontractor was doing “necessary work” on highway construction projects.

Without DBE, Mountain States would not have been able to qualify to do the projects. The work reportedly completed by the DBE subcontractor was actually completed by Mountain States employees who had been transferred to subcontractor’s payroll.

Ron stated that Mountain States had committed government contract fraud by making their employees do the work meant for the subcontractor employees and had “utilized a disadvantaged business as a subcontractor on a bid job.”

Mountain States did not admit any wrongdoing in the settlement, and the company believes it followed all rules of the DBE program and government contractor regulations.

In addition, Mountain States claimed it had complied with the investigation and cooperated with the authorities including turning over hundreds of documents relevant to the government contract fraud allegations.

“We strive every day to strictly comply with all the laws and regulations that govern every aspect of our work, including our relationships with Disadvantaged Business Enterprises,” Mountain States said.

The acting U.S. Attorney for the Middle District of Tennessee stated  that False Claims Act enforcement was a top priority of the Department of Justice, to prevent government contractor fraud and other forms of government fraud.

Ron had worked for Mountain States for 20 years before being fired, and will receive $500,000 as part of the settlement.

Overview of Whistleblower Laws

A generous award is typical under whistleblower laws, which provide protection and incentive to the first accounts of government fraud when the whistleblower hires an attorney to file a qui tam lawsuit.

Whistleblowers who file a lawsuit under the False Claims Act are typically awarded between 15% to 30% of the total settlement recovered.

Any employee, former employee, or contractor who witness government fraud is potentially eligible to file a whistleblower lawsuit. In addition, employers cannot retaliate against the employee or contractor under whistleblower laws.

If you have been a witness to fraud against the government, a whistleblower attorney can review your case for free and can assist you in pursuing legal action if your qualify.

This Whistleblower Lawsuit is Case No. 3:12-cv-0523, in the U.S. District Court for the Middle District of Tennessee.