Energy department pays $300 million in legal bills

Tuesday, December 30, 2003

WASHINGTON -- The Energy Department spent $330 million in taxpayer money to reimburse its private contractors for legal bills over a 5 1/2-year span, including for lawsuits they lost and settlements of sexual harassment and whistleblower allegations, congressional investigators reported Monday.

The department said the reimbursements were legal and that it scrutinizes each legal bill before deciding to pay. But a key congressman said the reimbursements amount to a "get-out-of-court free" card for contractors who engage in wrongdoing.

"When a contractor for the DOE gets sued, 95 percent of the time its legal fees and settlement costs get reimbursed by the federal government," said Rep. Edward Markey, D-Mass., a member of the House Energy and Commerce Committee.

The Energy Department is somewhat unique among federal agencies because private contractors run so many of its facilities, including national defense labs and former sites where nuclear weapons production activity took place.

The department's reimbursements came in 1,895 cases from late 1997 through March of this year, according to a report released by the General Accounting Office, the investigatory arm of Congress.

There were 814 cases involving workers compensation, 268 on equal employment opportunity, 100 from whistleblowers, 99 stemming from personal injury, 50 on wrongful termination of employment, 40 on radiation and different types of toxicity, and 524 on other matters, the GAO said.

563 cases pending

Of those, 563 cases are pending, including 290 on workers compensation and 56 on equal employment opportunity, the investigators reported.

Markey said that underwriting the costs of defending against lawsuits provides little incentive for Energy Department contractors to act within the law.

Markey said that one case of contractor reimbursement involved a $1 million jury award to a woman who sued Lawrence Livermore National Laboratory for wrongful termination. She had testified in a sexual harassment case on behalf of other lab workers.

"You would expect in any large-scale operation like this to find a fair number of personnel actions, workers comp claims and the like," said Steve Schooner, co-director of the government procurement law program at George Washington University law school.

Schooner said the Energy Department's rules on reimbursing contractors' legal bills are actually more stringent than those at the Pentagon and at the National Aeronautics and Space Administration.

The Energy Department pays all reasonable litigation costs in most cases. It does not pay when the contractor is liable under the False Claims Act. Even when the contractors prevail, the department pays a maximum of 80 percent of reasonable litigation costs in a False Claims Act case.

"Where DOE contractors are found liable for their activities, we make sure that our contracts are properly written to reflect what current regulations are," department spokesman Joe Davis said.

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