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Rolls-Royce faces whistleblower suit

Former quality control officers say company cheated the U.S. government

U.S. District Judge William Lawrence decided on Monday that Rolls-Royce Corp. must face a whistleblower lawsuit. Judge Lawrence ruled that plaintiffs Thomas McArtor and Keith Ramsey, both former Rolls-Royce quality control offices, could move forward on two of their four liability theories.

The plaintiffs allege that the airline engine manufacturer cheated the U.S. government when it failed to report defense contract product defects.

McArtor and Ramsey say Rolls-Royce induced the U.S. to enter into about 180 aircraft engine contracts between 2003 and 2006 by failing to disclose defects and hiding those practices to sustain third-party certification that was necessary to retain existing contracts and gain new ones. The pair also claimed that Rolls-Royce concealed its failure to comply with a required quality assurance plan.

Judge Lawrence, however, rejected the plaintiffs theory that Rolls-Royce could be liable for reverse false claims for allegedly failing to disclose defects to the U.S. in order to skirt refunds or issue replacement parts, saying the plaintiffs offered little more than conjecture.

The lawsuit, which the plaintiffs filed in 2008, was unsealed in 2010 after the U.S. declined to intervene.

The complaint details that thousands of military aircraft engines are potentially affected by Rolls-Royce’s alleged subterfuge, including the F-35 joint-strike fighter plane, C-130 Hercules transport and the V-22 Osprey.

McArtor and Ramsey, who are suing on behalf of the U.S., seek an $11,000 penalty for each false claim and each false statement the company made to the Defense Department, plus three times the amount of payments received or costs avoided. They also are seeking 30 percent of any such recovery for themselves.

Both plaintiffs claim they were terminated as a result of their disapproval with the company’s quality control measures. McArtor, who was employed from 1994 to 2006, says he was pushed out after reporting misconduct. Ramsey, who worked from 2002 to 2006, claims he was fired after refusing to cooperate with quality control plan changes.

For more on the story, read Bloomberg.

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