General Dynamics [GD] Electric Boat has filed a lawsuit in Florida federal court against a retired welder and his wife–Mickey and Joanne Skobic–who worked at a Jacksonville company, Nuflo, Inc.
, that provided unauthorized weld repairs to pipes on Virginia-class (SSN-774) attack submarines.
Mickey Skobic kept a journal between 2005 and 2014 during his time at Nuflo that detailed the weld repairs.
The Skobics “did not report this wrongful conduct, as required,” according to the lawsuit, filed on April 19 in U.S. District Court for the Middle District of Florida. “Instead, they kept the misconduct and the journal secret for their own personal purposes, compromising the integrity of the supply chain for nuclear submarines and putting the lives of sailors at risk. Electric Boat, therefore, brings claims against the Skobics to redress the losses it has suffered as a result of the Skobics’ conduct and to deter similar wrongful conduct from recurring.”
However, Jennifer Verkamp, a Cincinnati lawyer who has represented the Skobics, wrote in a June 11 email that they “risked a great deal to blow the whistle against large companies alleged to have defrauded the United States.”
“It is unconscionable that, in response, Electric Boat chose to bring what we believe to be a meritless lawsuit, which has the effect of chilling whistleblowers’ efforts to bring allegations of fraud to the government’s attention,” Verkamp wrote.
In November 2014, the Skobics, as the principal “whistleblowers” in a shell corporation, 84Partners, LLC, filed a Falsc Claims Act case against Nuflo, another pipe contractor–Synergy Flow Systems (SFS), Electric Boat and its fellow Virginia-class prime contractor Huntington Ingalls Industries [HII] Newport News Shipbuilding, but the U.S. District Court for the Middle District of Florida dismissed the case in September, 2021 and the U.S. Court of Appeals for the 11th Circuit last August upheld the dismissal in writing that “84Partners was unable to allege in good faith facts essential to a False Claims Act claim against EB or NNS.”
Each Virginia-class boat has 1.7 million parts supplied by 2,100 firms, GD said.
“Electric Boat has discovered that some parts it purchased from Nuflo and SFS contained undocumented and unauthorized weld-repairs that normal inspections could not detect,” the April 19 lawsuit said. “When Electric Boat made this discovery, it had to dedicate tens of thousands of labor hours to locating and re-testing many thousands of Nuflo parts to identify nonconformances and to determine, with the Navy, whether the parts could still be used for their intended purpose.”
“Due to the sheer quantity of parts to be retested, Electric Boat had to hire an additional workforce of full-time inspectors, who had to use costly, specialized tests to search for and identify otherwise invisible and undocumented weld-repairs,” GD said.
In 2015 and 2016, the inspections tied up three Virginia-class boats in dry dock–the USS Minnesota (SSN-783), USS North Dakota (SSN-784), and USS John Warner (SSN-785).
After the April 1963 loss of the USS Thresher (SSN-593), the U.S. Navy established the Submarine Safety (SUBSAFE) program. SUBSAFE’s quality control mechanisms are to ensure watertight pipes and fittings.
The 1863 False Claims Act stemmed from President Lincoln’s desire to stop deceptions by companies supplying the Union Army, including companies selling sawdust-laced gunpowder. In 1943, President Roosevelt signed amendments to the law that sought to prevent “parasitic lawsuits” in which citizens would wait for a criminal case to be filed and then file civil lawsuits seeking financial rewards for the whistleblowers. The 1943 law required dismissal of such a qui tam when the federal government was aware of the fraud alleged in the civil lawsuit. Major revisions to the law in 1986 during the Reagan administration and 2010 during the Obama administration included allowing relators—qui tam whistleblowers—to receive awards of up to 30 percent of a court judgment versus 25 percent, previously.
The law’s key 1986 revision–spearheaded by Sen. Charles Grassley (R-Iowa) and former Rep. Howard Berman (D-Calif.)–focused on procurement fraud and resulting recoveries for the government, but health care fraud, including in the Medicare and Medicaid programs, are the majority of cases and judgments now, and procurement represents just 10 percent of cases.
The Department of Justice said that fiscal 2023’s 543 settlements and judgments under the False Claims Act were the highest ever, and whistleblowers received about $349 million of the $2.3 billion in qui tam awards.