Fluor Settles Lawsuit for $12.5 Million

Fluor Corp. has agreed to pay the federal government $12.5 million to resolve a whistle-blower suit that the Aliso Viejo-based construction and engineering company padded bills for government work in the mid-1990s.

The settlement ends a five-year legal battle initiated by Cosby Coleman, a former senior finance manager, who alleged that Fluor improperly billed the federal government for company overhead expenses that were not directly related to government contracts.

It marked the second time Fluor has settled a whistle-blower suit stemming from an accounting dispute at a now closed division, Fluor Daniel Federal Operations. In 2001, Fluor agreed to pay $8.2 million to settle claims by Patrick C. Hoefer, the company’s former government financial compliance officer.

The company has denied any wrongdoing and said it agreed to settle both cases to avoid costly litigation.

The latest case centered around the same accounting dispute, but involved additional and wider alleged abuses, said Paul Lawrence, Coleman’s attorney.

For instance, depreciation expenses for corporate properties, such as a $20,000 antique Chippendale chair and a $410,000 condo in Palm Springs, was charged to government contracts, Lawrence said.

Coleman, who filed his suit in 2000 under the U.S. False Claims Act, was awarded $2.75 million, or 22%, of the total settlement.

The federal act allows whistle-blowers to sue contractors on behalf of the government and share in any recovery.

Lawrence said Fluor also agreed to pay Coleman an undisclosed sum to settle a separate claim that the company retaliated against Coleman for filing the whistle-blower suit.

Coleman, 66, who worked in Fluor’s Houston office, resigned in 2004. He claimed the company stripped him of all job responsibilities and isolated him in a windowless office with no work for three years.

A settlement was reached in Coleman’s suit Friday, three months after the Justice Department joined him in the whistle-blower lawsuit.

Under the False Claims act, individuals can sue on behalf of the government, but statistically the chances of their winning are small.

The prospects for a settlement, or a favorable judgment, grow if the government joins a case and agrees to prosecute.

Next year Fluor plans to move its headquarters to the Dallas area. On Tuesday, Fluor shares rose 42 cents to $64.02.