Insult to injury
The lawyer representing two Grand Junction Regional Airport tenants whose whistleblower suit sparked a federal fraud investigation of the operation, called a proposed settlement “a whitewash,” claiming federal investigators didn’t push hard enough to establish malfeasance.
If there’s an instance of a whitewash here, it’s what has happened since a federal judge upheld the settlement — a $16,500 fine for the airport for filing some questionable paperwork with the Federal Aviation Administration.
Even though FAA officials testified they weren’t induced by any misrepresentations to approve an expensive fence project at the airport, the case resulted in a minuscule fine compared to the $16.5 million the “relators” in the case sought.
Unfortunately, the issuance of a fine established the relators — Dave Shepard and Bill Marvel — as the prevailing party. The federal law in this context says the prevailing party is entitled to reasonable attorney’s fees, which the judge in the case calculated at $108,600.
The airport had previously offered to settle the case for $100,000. So, even though Shepard and Marvel only recovered what the airport had been willing to pay anyway, the judge’s recent award allows them to claim a victory as crusaders who broke up a lawless regime and brought about needed changes at the airport.
We don’t often use this space to comment about a court decision, but the way the case unfolded is troubling at every turn, especially given how the relators are portraying themselves as heroes over what is essentially a slap on the wrist.
Shepard and Marvel filed a “qui tam” lawsuit, a type of civil suit whistleblowers bring under the False Claims Act — a federal law that rewards whistleblowers if their allegations recover funds for the government.
The law also provides job protection to whistleblowers. As we’ve pointed out before, Marvel and Shepard weren’t airport employees. They weren’t privy to “insider” information. They didn’t expose wrongdoing inside a closed system. They merely ascribed bad intentions to actions the airport board had made openly and publicly. Newspapers routinely examine public records and expose possible wrongdoing without using whistleblower laws to seek a stake in alleged ill-gotten gains.
Conveying whistleblower status to private citizens — allowing them to recover damages on information that isn’t hidden from view — seems like bad policy. But the secretive nature of the qui tam proceedings allowed the men’s whistleblower claim to go unchallenged.
If their goal was to simply to intervene in the public interest by exposing bad management, they could have done so by taking their concerns to the U.S. Attorney’s Office. But they went the additional step of choosing a legal tool that would have rewarded them financially if their allegations of fraud had been substantiated.
Prosecutors arrived at a settlement offer — the fine, rather than millions in treble damages — following a two-year investigation by seasoned federal fraud officers. One FAA official told the court he felt the settlement was appropriate, considering the damage the investigation caused at the airport: a $6.2 million building was halted mid-construction, the airport’s general manager was fired, a transformation plan for a new terminal was derailed and a runway improvement project was delayed.
The whistleblower case yielded the smallest possible victory for Marvel and Shepard, yet they’re taking the lion’s share of the credit for the difficult work the Airport Authority had to do in the wake of their allegations. The judge’s hands were tied in determining reasonable attorney’s fees and she reduced them as much as possible. Nevertheless, the airport board’s having to pay $108,000 is an insult on top of injury.