Defense Contractor Northrop Grumman Settles False Claims Act Lawsuit Over Defective Satellite Parts


Northrop Grumman Corporation agreed April 2 to settle a federal whistleblower lawsuit for $325 million, the New York Times reported. The lawsuit alleged that TRW Inc, a defense contractor that Northrop later acquired, intentionally suppressed evidence that certain electrical parts it manufactured did not work properly, causing the expensive failure of several defense satellites in orbit. Then, an attorney quoted in the article said, the contractor charged the federal government millions of dollars to investigate the problems with a satellite. The deal included another settlement of an unrelated case by Northrop against the government, leaving the company with no net gain or loss.

The qui tam lawsuit grew out of allegations from scientist Robert Ferro, who worked for a subcontractor to TRW. Ferro found problems with certain transistors TRW manufactured for defense satellites, the article said, and reported them to TRW. But TRW not only did not report the problems to the government, but allegedly continued to sell the parts and blocked Ferro’s attempts to include the information in a report to the Air Force later. He filed a lawsuit in 2002, but because the case was under seal (as required by federal law), his name was only revealed after the settlement. As part of the settlement, Ferro will receive $48.8 million.

Federal, state and local laws allow people like Ferro to bring whistleblower lawsuits against organizations they believe are defrauding government agencies or misusing government resources. Because this typically requires inside knowledge about an organization, the False Claims Act has two unusual features giving them a special incentive. One is the requirement that the original claim and the whistleblower’s name be kept from public knowledge. The other is that the whistleblower stands to receive 15% to 30% of any money the government wins. Prosecutors can choose to intervene under the False Claims Act, but even if they do not, the whistleblower has the right to continue the suit as a “private attorney general,” often with help from a private law firm.

If you have evidence that a company you work with is defrauding a government agency, you may be able to pursue a qui tam action, with or without help from prosecutors. Lubin Austermuehle’s Chicago and Oak Brook whistleblower and qui tam attorneys stand ready to represent whistleblowers pursuing claims under the False Claims Act, the Chicago False Claims Act and the Illinois Whistleblower Reward and Protection Act. Based in Chicago and Oakbrook Terrace, Ill., our firm handles claims throughout Illinois, Indiana, Wisconsin and the United States. To learn more about your options at a free, confidential consultation, you can contact Lubin Austermuehle via email or call toll-free at 630-333-0333.

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