Ninth Circuit Lets Whistleblower Sue Raytheon

PASADENA, Calif. (CN) - Previous reports of wasted money do not bar an engineer from suing Raytheon under the False Claims Act on claims that it bilked the federal government for radiometer sensor work, the Ninth Circuit ruled, reversing and remanding the case.

Steven Mateski sued Raytheon in 2006, claiming it violated a host of contract requirements in developing a radiometer suite sensor, covered up areas of noncompliance, and improperly billed the government for erroneous and incomplete work.

Mateski worked as an engineer at Raytheon from 1997 to 2006, and was assigned to work on the visible infrared imaging radiometer suite sensor (VIIRS) in 2005. The project was part of the National Polar-Orbiting Operational Environmental Satellite System (NPOESS), which collected meteorological, oceanographic, environmental and climatic data.

The satellite system, court documents state, incurred numerous delays and cost overruns.

Beginning in 2003, work on the sensor attracted public attention as a source of the problems.

The Government Accountability Office reported in 2004: "At present, the program office considers the three critical sensors - VIIRS, CMIS, and CrIS - to be key program risks because of technical challenges that each is facing."

The GAO added in 2005 that the "VIIRS sensor development issues were attributed, in part, to [Raytheon's] inadequate project management." (Parentheses in Ninth Circuit ruling, citing the GAO report.)

The Inspector General at the Department of Commerce, in a separate report, noted that "[i]nadequate oversight, in effect, postponed the critical evaluations and decisions needed to replan the program's faltering elements and contain the cost and schedule overruns. Time and money were thus wasted as the problems with NPOESS continued unchecked."

In his fourth amended complaint, Mateski said that "(f)rom 2002 to at least 2012, defendant [Raytheon] has knowingly submitted false NPOESS VIIRS claims for payment, whereby the United States government has been induced to pay money that it would not have paid if defendant [Raytheon] had disclosed the true defective nonconformances with the NPOESS VIIRS specifications and requirements." (Brackets in ruling, citing the complaint.)

Mateski made numerous specific allegations, including creation of false waivers, improper and forged signoffs certifying work performed, failure to rectify issues relating to electrostatic discharge, cross contamination of flight and nonflight quality materials, and use of prohibited materials such as tin plating.

A district court dismissed the claims, however, ruling that "(I)t was publicly known that there was rampant mismanagement, deviations from protocol, and other problems with VIIRS."

Raytheon claimed the lawsuit was barred by § 3730(e)(4)(A) of the False Claims Act, known as the public disclosure bar: "No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions."

Mateski appealed.

The Ninth Circuit reversed and remanded on Monday, finding that the public disclosure bar did not put the brakes on the lawsuit.

It found that Mateski's claims were not "substantially similar" to previous, publicly disclosed reports "when viewed at the appropriate level of generality."

"Mateski's complaint alleged fraud that was different in kind and degree from previously disclosed information about Raytheon's problems in performing on the contract at issue," Circuit Judge Michelle Friedland wrote for the three-member panel. "If his allegations prove to be true, Mateski is a relator who will have provided the government with genuinely new and material information about fraud, he should be allowed to move forward with his qui tam suit."

Mateski showed in his "lengthy complaint" that the allegations were "vastly more precise" than prior public reports about the problems with VIIRS, the Ninth Circuit found.

"For instance, Mateski alleges numerous particular false waivers of VIIRS specifications and requirements," Friedland wrote. "He also describes false and inappropriate signoffs and certifications in violation of the program quality requirements, including 'obvious forged signoffs' by Raytheon VIIRS operators."

If Mateski's allegations prove true, he will "undoubtedly have been one of those 'whistle-blowing insiders with genuinely valuable information,' rather than an 'opportunistic plaintiff[] who ha[s] no significant information to contribute,'" the Ninth Circuit wrote, citing United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994).

Raytheon, founded in 1992, specializes in defense, civil government and cybersecurity work.

Based in Waltham, Mass., it has 61,000 employees worldwide and reported $23 billion in sales in 2015.

Also on the Ninth Circuit panel were Judges Mary Schroeder and Harry Pregerson.

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