CH2M Hill Hanford Group has admitted to federal, civil and criminal violations for defrauding the public through years of widespread timecard fraud.
To resolve civil and criminal liability, it's agreed to pay $18.5 million, to commit an additional $500,000 towards accountability systems, to consent to a corporate monitor and to continue actively cooperating with an ongoing fraud investigation, according to the U.S. Attorney's office for the Eastern District of Washington.
As part of the $18.5 million settlement it will refund $1.95 million in wrongfully obtained profits. The agreement acknowledges that certain upper management and supervisors did not discipline hourly workers for routinely engaging in known timecard fraud.
The Justice Department also has signed a criminal non-prosecution agreement with CH2M Hill as part of the settlement.
CH2M Hill has offices in Bellingham. It is currently organizing the public comments of the proposed coal export terminal at Cherry Point and will be issuing a scoping report to the reviewing government agencies.
Last fall, the federal government took over a civil lawsuit filed by former CH2M Hill worker Carl Schroeder on behalf of the United States under the False Claims Act. The act allows individuals to sue on behalf of the government and collect a portion of any damages awarded.
Schroeder is one of eight former CH2M Hill workers who have pleaded guilty in U.S. District Court for Eastern Washington to conspiracy to commit timecard fraud.
"CH2M HILL is satisfied with the amicable resolution that we have reached with the government with respect to this matter. It goes without saying that we are very disappointed by the conduct that made the settlement necessary," CH2M Hill spokesman John Corsi said in a statement emailed to the Herald.
"Timecard fraud by certain employees at a former Hanford project predated our presence on the project and a lack of proactive steps to correct the problem during our tenure threatened the good reputation of the large and productive Hanford workforce. This conduct was not consistent with CH2M HILL values, but it happened on our watch and we should have rooted it out sooner. 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," Corsi stated.
"CH2M HILL has fully cooperated with the government to bring the guilty parties to justice and we continue to do so," he said.
The eight former workers admitted to claiming a full eight hours of work when they were assigned to overtime shifts after their regular workdays or work weeks ended, even though they worked fewer than eight hours of overtime.
Schroeder filed the claim in federal court in 2009, but the case was sealed until last fall.
The lawsuit claims the contractor knowingly presented false claims to the Department of Energy for overtime payments for more than a decade.
DOE reimbursed CH2M Hill for the wages it paid to workers at the Hanford tank farms. The company’s management contract for that project expired in 2008.
The farms store 56 million gallons of high-level radioactive waste in underground tanks until they can be treated for disposal. The waste is left from the past production of plutonium at Hanford for the nation’s nuclear weapons program.
The lawsuit also accused CH2M Hill of “upcharging” in a second way by diverting routine work that should have been performed on regular shifts to overtime shifts, during which workers received time-and-a-half or double-time pay.
Almost all of the 400 to 500 CH2M Hill employees who participated in upcharging had the consent of supervisors and other management, the lawsuit alleged.
CH2M Hill said in September that it brought up concerns about timecard practices at the Hanford tank farms to the federal government as early as 2004 and asked for help in investigating the matter.
The $500,000 for monitoring will be for three years at the CH2M Hill Co. which still has a contract at Hanford. The firm is in charge of central Hanford cleanup.
The Department of Justice said the widespread timecard fraud was not limited to overtime abuse and it occurred for many years, in some instances predating the CH2M Hill’s contract at the tank farms.
“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,” said U.S. Attorney Michael Ormsby.
“I hasten to add that CH2M Hill has stepped up, admitted the criminal conduct of its subsidiary and has agreed to pay back a good faith estimate of what was taken, including criminal proceeds from the conspiracy.”
The investigation is continuing.
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