Suit Claims Fluor Overcharged Government for Nuclear Site Cleanup

Divisions of Irvine-based Fluor Corp. and CBS Corp. are being sued for $240 million by a former worker who alleges that the companies overbilled the U.S. Department of Energy for cleanup work at the Hanford nuclear site in Richland, Wash.

David Carbaugh, a Washington resident who was an accountant at Hanford, filed a lawsuit this week in U.S. District Court in Spokane, alleging that Fluor’s Fluor Daniel unit and CBS’ Westinghouse Hanford Co. knowingly overstated their labor costs.

Carbaugh said he worked for both contractors at Hanford from 1979 until 1997. Carbaugh alleges he was fired for reporting his accusations.

He is seeking $240 million in damages on the government’s behalf under the False Claims Act, which, to encourage whistle-blowers, allows employees collect at least 15% of any damages recovered.

Carbaugh also is seeking an unspecified amount for himself for unlawful discharge and discrimination.

The federal government didn’t join the suit.

“We believe the fact that the government declined to participate in this lawsuit does have a bearing on its merits,” CBS spokesman Gil Schwartz said. “We believe the lawsuit has no foundation, and we will defend vigorously against it.”

Rick Maslin, spokesman for Fluor Corp., said Wednesday that company officials had not yet seen the lawsuit and declined to comment on any specifics of it.

“We certainly believe that we are not in any way defrauding the government,” Maslin said. “But it would be inappropriate to comment on the lawsuit itself.”

Maslin said he believes the allegations mirror a 1996 lawsuit and that “the Justice Department at that time did investigate it and did not find a basis for intervening.”

Said U.S. Energy Secretary Bill Richardson, in a statement: “We haven’t seen the filing yet, but if it contains any information suggesting that our contractors have improperly received DOE funds, then we will pursue it vigorously.”

The federal government opened the Hanford facility in the 1940s to produce plutonium for nuclear weapons. These operations caused pollution, and in 1987 the U.S. began a cleanup of the 560-square-mile site.

Westinghouse oversaw cleanup at Hanford from 1987 to 1996. Fluor Daniel succeeded Westinghouse under a five-year contract.

The DOE pays for all cleanup costs up to a cap set annually by Congress. Contractors must pay costs that exceed that limit.

Carbaugh said the contractors’ cost formula, which is provided to Congress so it can determine a budget for the Hanford site, was only supposed to be applied to regular work time. The contractors’ computerized accounting system, however, also applied the formula to overtime. This resulted in Fluor Daniel and Westinghouse overbilling the government for more than $85 million, he said.

For a Hanford worker who earned $50,000 in regular pay and $10,000 in overtime, the contractors billed the government for almost $3,000 in nonexistent costs, the suit says.

“These fictitious labor costs were paid to the defendants by the United States, but the workers performing the Hanford cleanup never received the benefit of these moneys,” the suit alleges. “The defendants diverted these moneys to their own purposes and profit.”

New York-based CBS last month sold its nuclear-power operations, Westinghouse Electric Co., to British Nuclear Fuels Plc. Westinghouse Hanford, which was once part of Westinghouse Electric, was not part of the transaction, a Westinghouse Electric spokesman said.

Fluor shares fell 63 cents, to $29, while CBS was unchanged, at $43.69, in New York Stock Exchange trading.