A Virginia-based tech company has agreed to pay $128 million to settle a whistleblower case in which it was accused of overcharging the government for its products, according to the Justice Department.
The department alleged that NetApp of McLean, Va., a maker of high-end data management and storage equipment, violated the False Claims Act by charging the General Services Administration higher prices than it offered to many of its commercial clients. Companies that do business with the GSA are required to offer it the lowest prices they charge their other customers.
According to the settlement, the Justice Department alleged that between 1997 and 2005, NetApp misled the GSA by providing inaccurate and incomplete data regarding its pricing practices. A NetApp employee who managed its procurement operations, Igor Kapuscinski, eventually filed a whistleblower complaint against the company before Judge Ricardo Urbina of the U.S. District Court for the District of Columbia.
“This settlement shows that the United States will not tolerate misconduct in the pricing of government contracts,” said Michael F. Hertz, acting assistant attorney general for the Department of Justice’s Civil Division, in a statement. The government's lawyers also included Sara McLean and Rebecca Ford of the Civil Division, and Assistant U.S. Attorney for the District of Columbia Laurie Weinstein.
Kapuscinski, who was represented by Ashcraft & Gerel partner Vincent McKnight, will receive 15 percent of the settlement, or $19.2 million. NetApp is also paying Kapuscinski, who quit his job at the company after going public with his complaint, $75,000 for legal fees and expenses, according to the settlement.
McKnight says this is the largest single-case settlement in his firm’s history, though he declined to comment on what percentage of the award it would receive.
NetApp, which is represented by Roger Goldman of Latham & Watkins, declined to comment on the case. It directed a reporter to the company’s most recent SEC filing, which says the company agreed to the settlement on April 7.
UPDATE 6:17 p.m.