In a previous post we aimed to explain why those affected by the defective Combat ArmsTM earplugs would not see any benefit from the $9 million settlement, numerous requests have come in asking us to explain in more detail about the actual lawsuit.
The False Claims Act
The False Claims Act is a longstanding part of the U.S. Law that protects that the government when it is paying out money for various reasons. This statute has been applied to everything from fraudulent Medicare claims to government contractors that overcharge the government. If you are doing business with the federal government, you do not want to see yourself on the receiving end of government action that has its basis in the False Claims Act. 3M was in exactly this type of situation and found itself paying $9.1 million to the federal government to settle claims that it knowingly sold the government defective earplugs that had the potential to cause damage to the soldiers whose ears were supposed to be protected.
The False Claims Act was originally passed in response to rampant fraud perpetrated against the United States military during the Civil War. Back then, crooked contractors defrauded the Union Army by selling it sick mules, lame horses, sawdust instead of gunpowder, and rotted ships with fresh paint. Unfortunately, what we see today is just a modern version of the same thing — deceptive and fraudulent practices directed at the U.S. government and the American taxpayer,” said Assistant Attorney General Jody Hunt. “The Department of Justice has placed a high priority on rooting out and pursuing those who cheat government programs for their own gain. The recoveries announced today are a message that fraud and dishonesty will not be tolerated.
The False Claims Act is somewhat unique in that anyone can take action to enforce the provisions of the statute. In other words, waiting for the government to file a claim against someone is not a necessity. Instead, the statute allows private parties to act as their own enforcement entity by filing a suit themselves. This is meant to incentivize whistleblowers to come forward and provide information when someone is defrauding the government. The reward for someone who successfully files what is called a qui tam suit is that they can keep between 15 and 30 percent of the recovery. In addition, the attorneys filing the suit get a portion of the recovery to pay for their time and expenses. In some cases, the government elects to take over the suit once it has already been filed. When that happens, the qui tam relator still receives a portion of the recovery.
In the case of 3M, it was a competitor of the company that filed the whistleblower lawsuit. Moldex is a longstanding competitor in the space of earplugs and it and 3M have a long history of bitter legal jousting. The two competitors have been suing each other for years. Here, Moldex had an idea that the combat earplugs that 3M was selling to the federal government were defective. Specifically, the earplugs were too short to properly fit in servicemembers’ ears. The earplugs lost their seal and moved out of place in the ear canal. This did not provide adequate protection for servicemembers who were relying on these earplugs to prevent hearing loss. This was something that the original manufacturer was alleged to have known as far back as 2000. In addition, Moldex also accused 3M and the original manufacturer of these plugs of manipulating test results to try to show that these earplugs were in line with what the government required. Thousands of service members either lost part of their hearing or suffered from tinnitus as a result of wearing defective earplugs.
When a contractor is facing a False Claims Act lawsuit, they face the possibility of significant monetary consequences. The False Claims Act allows the government to seek an amount triple to what its actual damages are. This is aimed at acting as a deterrent to those who would attempt to defraud the government. With that in mind, 3M entered into a settlement with the Department of Justice. The company agreed to pay $9.1 million to settle the charges that it defrauded the government by providing defective earplugs. Half of this amount was punitive damages assessed against 3M. Not only did Moldex deal a severe reputational blow to its competitor, but it also received nearly $2 million for filing the whistleblower suit.
No Criminal Liability for 3MTM
Since the suit was settled, 3M cannot be prosecuted criminally for selling these earplugs to the federal government. At the same time, 3M was not required to admit guilt for selling these earplugs, meaning that in any civil suit, the defective nature of these products will still have to be proven in court should veterans file a product liability lawsuit against 3M.
If you or a loved one has suffered hearing damage or loss due to defective military earplugs you may be entitled to compensation – speak directly with an attorney by calling (888) 859-9151 for a free, no obligation consultation.