Raytheon must face $1 billion whistleblower lawsuit: U.S. appeals court

(Reuters) - Raytheon Co must defend against a $1 billion whistleblower lawsuit accusing the defense contractor of fraudulently overbilling the U.S. government under a contract to develop a weather sensor for a costly environmental satellite system, an appeals court ruled on Monday. By a 3-0 vote, the 9th U.S. Circuit Court of Appeals in Pasadena, California said an engineer, Steven Mateski, could pursue claims that Raytheon violated the federal False Claims Act for at least a decade starting in 2002.

A man walks past the Raytheon exhibition during the Australian International Airshow in Melbourne March 2, 2011 REUTERS/Mick Tsikas

The court said Mateski’s claims went beyond publicly disclosed problems in developing the National Polar-Orbiting Operational Environmental Satellite System, which suffered from delays and cost overruns, including problems outlined in a U.S. Government Accountability Office report from November 2005.

“If his allegations prove to be true, Mateski will undoubtedly have been one of those whistle-blowing insiders with genuinely valuable information, rather than an opportunistic plaintiff who has no significant information to contribute,” Circuit Judge Michelle Friedland wrote for the appeals court.

A spokesman for Raytheon had no immediate comment on the decision. The company is based in Waltham, Massachusetts.

Allan Graf, a lawyer for Mateski, said his client was grateful for the decision.

Mateski’s allegation was that Raytheon, his employer from 1997 to 2006, mismanaged its subcontract to develop the Visible Infrared Imaging Radiometer Suite sensor for the NPOESS, on which Northrop Grumman Corp held the main contract.

Friedland said it would be unfair to the government and whistleblowers to impose a “public disclosure bar” against False Claims Act lawsuits such as Mateski’s that identified “specific instances of fraud,” where public documents such as the GAO report merely described “problems” or even “generalized fraud.”

Monday’s decision overturned U.S. District Judge Otis Wright’s February 2013 dismissal of the lawsuit, and returned the case to his Los Angeles courtroom.

False Claims Act cases let whistleblowers pursue claims on behalf of the government and share in recoveries. The United States in 2012 decided not to help Mateski pursue his case.

The case is U.S. ex rel Mateski v. Raytheon Co, 9th U.S. Circuit Court of Appeals, No. 13-55341.

Reporting by Jonathan Stempel in New York; Editing by Alan Crosby and Grant McCool