United States Joins Lawsuit against AECOM Alleging False Claims in Connection with Hurricane Disaster Relief
Xavier University of Louisiana Agrees to Pay $12 Million to Resolve Related Allegations
The United States has intervened in a whistleblower lawsuit against AECOM, an architecture and engineering firm based in Los Angeles, California, and certain disaster relief applicants, alleging that they violated the False Claims Act by submitting false claims to the Federal Emergency Management Agency (FEMA) for the repair or replacement of certain facilities damaged by Hurricane Katrina, the Justice Department announced today.
“FEMA plays a critical role in helping communities to recover from natural disasters,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “To ensure that FEMA can accomplish its mission and help those truly in need, the department will hold accountable those who seek to defraud FEMA by providing false information about their entitlement to assistance.”
Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and program rules, FEMA provided institutional applicants, such as schools and universities, with Public Assistance (PA) program funds for the repair or replacement of facilities damaged by Hurricane Katrina. Applicable rules, however, limit such funding to the amount required to restore damaged facilities to their pre-disaster condition, and the full cost of replacement is available only if repair estimates exceed a defined threshold.
AECOM received more than $300 million from FEMA between 2005 and 2019 as a technical assistance contractor in support of FEMA disaster response efforts on the Hurricane Katrina recovery. In this role, AECOM was responsible for conducting site evaluations and preparing and reviewing damage and repair estimates used to determine whether applicants were eligible for PA program funds. In particular, AECOM and the applicants were responsible for providing FEMA with truthful and accurate information regarding each facility’s pre-disaster design and all damage resulting from Hurricane Katrina.
The lawsuit alleges that, between 2007 through 2013, AECOM knowingly submitted false claims on behalf of applicants seeking PA program funds, including by using inflated repair estimates and other false information that improperly increased funding for applicants. In addition, the lawsuit alleges that certain applicants falsely certified the accuracy of the information and are thus jointly and severally liable for false claims prepared and submitted by AECOM on their behalf. The lawsuit further alleges that, by 2011, AECOM management was aware of systemic problems concerning the provision of false and inaccurate information to FEMA but failed to notify the government.
One of the recipients named in the lawsuit, Xavier University of Louisiana, has agreed to pay the United States $12 million to resolve its alleged role in the submission of false and misleading repair estimates prepared by AECOM on its behalf. According to the government’s allegations, Xavier improperly obtained PA program funds for its gymnasium, student center, and electrical grid that substantially exceeded the amounts it was entitled to receive under program rules. As part of the settlement, Xavier has agreed to cooperate with the department’s investigation of other parties and any related litigation.
“Federal disaster funds are an instrumental component in the effort to assist disaster victims with their recovery,” said the U.S. Attorney’s Office for the Eastern District of Louisiana. “The favorable resolution of this False Claims Act matter illustrates the collaborative efforts and firm commitment by our federal partners to use all available remedies to address signs of fraud, waste and abuse.”
“The Department of Homeland Security (DHS) Office of Inspector General will continue to identify and investigate disaster fraud schemes to ensure that taxpayer funds are properly spent to help disaster victims and rebuild affected communities,” said DHS Inspector General Dr. Joseph V. Cuffari. “We remain committed to working with our partners in the Department of Justice to root out waste, fraud and abuse.”
The lawsuit was originally filed under the qui tam or whistleblower provisions of the False Claims Act (FCA) by Robert Romero, an AECOM Project Specialist. The FCA permits private parties to file suit on behalf of the United States for false claims and to share in any recovery. The FCA also permits the United States to intervene in such an action, as it has done, in part, in this case. The whistleblower lawsuit is captioned United States ex rel. Robert Romero v. AECOM, Inc., et al., No. 16-cv-15092 (E.D. La.). As part of the resolution with Xavier, Mr. Romero received approximately $2.3 million.
The lawsuit is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Louisiana, with assistance from FEMA’s Office of Chief Counsel. Investigative support is being provided by the Department of Homeland Security’s Office of Inspector General, through its Major Fraud and Corruption Unit and New Orleans Resident Office.
The claims alleged in the lawsuit, including those resolved by Xavier, are allegations only, and there has been no determination of liability.