CH2M Hill agrees to timecard fraud settlement

By Annette Cary, Tri-City HeraldMarch 7, 2013 

CH2M Hill has agreed to pay $18.5 million to settle civil and criminal allegations of defrauding taxpayers through widespread timecard fraud at the Hanford nuclear reservation.

It's the largest-ever penalty for a Hanford contractor and possibly the largest settlement ever negotiated by the U.S. Attorney's Office for the Eastern District of Washington, said U.S. Attorney Michael Ormsby on Wednesday.

The settlement includes $16.55 million to resolve civil liability under the False Claims Act and a refund of $1.95 million in wrongfully obtained profits by CH2M Hill Hanford Group, the Department of Energy's Hanford tank farm contractor until 2008. It managed 56 million gallons of radioactive waste from the past production of weapons plutonium held in underground tanks.

CH2M Hill also will pay $500,000 toward a timekeeping system to better monitor timecards for workers on its current Hanford contract. CH2M Hill Plateau Remediation Co. is responsible for environmental cleanup in central Hanford and cleaning up contaminated groundwater.

It will hire a corporate monitor at a cost of up to $80,000 to develop policies, procedures and employee training, the settlement agreement said.

In addition, CH2M Hill will continue to cooperate in the Department of Justice's ongoing fraud investigation. To date, eight former workers for CH2M Hill at the Hanford tank farms have pleaded guilty to timecard fraud.

However, the settlement agreement lists 24 additional people, including managers and supervisors whom the Department of Justice reserves the right to possibly hold liable.

CH2M Hill has agreed that certain members of upper management and supervisors of hourly workers did not take steps to discipline workers claiming unworked overtime and in some cases supervisors helped hide the fraud, according to the Department of Justice.

"This sort of systemic fraud is an appalling abuse of the trust we place in our contractors at Hanford and it simply will not be tolerated," Ormsby said.

As part of the settlement, the Department of Justice has agreed there will be no criminal prosecution of CH2M Hill.

It announced in September that it was taking over a civil whistleblower lawsuit filed against CH2M Hill Hanford Group and its parent corporation, CH2M Hill, alleging timecard fraud. Former CH2M Hill worker Carl Schroeder, who has pleaded guilty to timecard fraud, filed the lawsuit in federal court under the False Claims Act, which allows individuals to sue on behalf of the government.

CH2M Hill acted responsibly, stepped up and admitted the fraudulent activity, Ormsby said.

"It goes without saying that we are very disappointed by the conduct that made the settlement necessary," said John Corsi, spokesman for CH2M Hill, who added that the company is satisfied with the resolution reached with the Department of Justice.

The settlement covers the years of 2005-08, but some employees were filling out fraudulent timecards before CH2M Hill held the tank farm contract, Corsi said.

"This conduct is not consistent with CH2M Hill values, but it happened on our watch and we should have rooted it out sooner," he said. "Since 2008, we have made many important oversight and governance changes in how we monitor and manage timecards and overtime at Hanford to make sure that this does not happen again."

Workers at Hanford are accused of refusing to work overtime unless it was offered in eight-hour blocks. When overtime assignments were completed they would go home, but claim a full eight hours of overtime, CH2M Hill acknowledged in the settlement agreement.

By paying eight hours of overtime when fewer hours were worked, CH2M Hill was able to recruit volunteers for overtime and finish work needed to earn profit for meeting performance goals in its DOE contract, Ormsby said. DOE reimbursed CH2M Hill for the hourly and overtime pay to employees.

Under the False Claims Act, whistleblowers can collect a portion of any damages awarded. However, Schroeder has pleaded guilty and the act bars whistleblowers from benefiting if they are convicted based on their role in the scheme.

-- Annette Cary: 582-1533;; Twitter: @HanfordNews

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