Joseph Carson (73530.2350@CompuServe.COM)
25 Mar 97 20:54:19 EST
DOE is fundamentally corrupt because it can't address the corruption within
it. Only waves its arms at it.
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March 16, 1997 Feds pay in Battelle fraud case
SPOKANE Taxpayers even pay cost of defending
Hanford firm against whistleblower
Karen Dorn Steele/The Spokesman-Review
U.S. government investigators agreed that
scientist Jagdish C. Laul was fired for
Reply turning in his managers for fraud.
There are replies A federal appeals court agreed Laul could
sue the Hanford contractor for whom he
[Image] worked for wrongful termination.
The government made the contractor,
Battelle's Pacific Northwest National
RELATED Laboratory, pay back $330,000 for
SECTIONS: double-billing lab equipment -- and even
[x] recommended Battelle managers be criminally
Entertainment prosecuted for fraud.
But who picked up the $750,000 tab for
defending Battelle against Laul's lawsuit?
Laul's case is the most recent example of a
system that allows private nuclear
contractors to rack up huge legal bills
fighting whistleblowers -- even when the
contractor's in the wrong.
Battelle settled with Laul in January to
head off a federal jury trial in Spokane.
The cost of his case to taxpayers includes
the $250,000 settlement paid to Laul;
$400,000 in legal fees to Battelle's
outside law firm, Davis Wright Tremaine of
Seattle; and about $100,000 in legal work
and other Battelle costs to fight Laul.
If Laul had won at trial, taxpayers would
have paid that bill, too. That's because of
a Cold War agreement in which the U.S.
government promised to pay all legal costs
of its nuclear weapons contractors when
they agreed to run the government's weapons
The agreement, called indemnification, is
still in effect today. It applies to
Battelle, which works on Hanford cleanup
and other government nuclear programs.
Under contract reforms pushed by the
Clinton administration, the government
plans to stop reimbursing contractors when
a court rules against them, or if they're
found guilty of reprisal in a whistleblower
The reforms don't yet apply to Battelle.
Under its current contract, the company's
top manager has to be involved in illegal
retaliation before taxpayers won't pay
their legal bills, said Carolyn Reeploeg,
DOE's assistant chief counsel in Richland.
That will change in Battelle's new
contract, currently under negotiation,
The reforms, which also apply to other
Hanford contracts, ``broaden protections
for whistleblowers,'' she said.
But they don't go far enough, said Alene
Anderson, Laul's attorney from the
Government Accountability Project, a group
that represents whistleblowers.
``The system is stacked against
whistleblowers. They still let these cases
get to the courthouse doorstep. Millions of
taxpayer dollars can be spent before
that,'' Anderson said.
Despite its settlement with Laul, Battelle
still isn't admitting any wrongdoing in his
firing. The company even denies Laul's a
``In our view, the taxpayers are served
when contractors defend themselves from
frivolous lawsuits,'' said Battelle
spokesman Greg Koller.
But newly disclosed reports show the U.S.
Department of Energy's inspector general
recommended criminal sanctions in 1993
against Battelle managers for covering up
the lab fraud reported by Laul.
The confidential reports were obtained
under the Freedom of Information Act.
Battelle improperly modified a $210,000
piece of lab equipment, fired Laul and then
lied to the Energy Department in a
cover-up, the inspector general's
The U.S. Justice Department made Battelle
repay the government $330,000. Laul got
$60,800 of that for his role in identifying
the fraud under the Federal False Claims
Act. He brought the claim in 1995.
Battelle's treatment of Laul demonstrates
the company's ``inability to conduct an
unbiased investigation,'' said George
Allen, the inspector general's
Battelle repaid the government with private
contract revenue, not taxpayer money. The
criminal charges were then dropped.
The dispute goes back a decade.
In 1987, Battelle purchased two $210,000
mass spectrometers to analyze chemicals for
a government program at Hanford, Nevada and
Texas to build a tomb for commercial wastes
from nuclear power plants.
Laul, a 57-year-old geochemist, was a
project manager doing groundwater studies
for that program. It was canceled in 1988
when Congress decided to build a repository
at the Nevada Test Site.
In 1990, Battelle illegally modified the
spectrometer in the Hanford nuclear waste
cleanup program, the inspector general's
Battelle was ``double billing'' Hanford's
former site contractor, Westinghouse
Hanford Co., for the equipment by seeking
reimbursement from both the civilian
nuclear waste project in Nevada and the
Hanford cleanup program, the report said.
The lab flap delayed progress in nuclear
waste cleanup, including Hanford's single
shell tank program, the most urgent and
riskiest in the nation's weapons complex,
the inspector general noted.
Those delays cost taxpayers $300,000,
according to the report. That's in addition
to the legal fees.
In October 1989, Laul reported the
equipment misuse to DOE because he was
angry his work would be jeopardized by
modifying the machine.
Battelle fired Laul in May 1990, saying he
had improperly disposed of hazardous waste
-- a violation DOE later said Battelle used
as an excuse to fire him.
On at least two occasions, Battelle's legal
spat with Laul could have been stopped.
Energy Department records show that John
Wagoner, Hanford's top manager, was told by
his own investigator in April 1991 that
Battelle should settle with Laul because
Battelle was at fault and likely would lose
a jury trial.
Steve Abernethy, DOE's safety concerns
manager, said in a report to Wagoner that
Battelle fired Laul because he reported the
fraud, not because he mishandled the
DOE should ``direct PNL (Battelle) to quit
spending contract funds to defend this
case'' and order a settlement with Laul,
Abernethy said in his report.
Battelle strongly disagreed.
``We think there's no connection'' between
Laul's firing and his reporting the lab
equipment dispute to DOE, Koller said in an
interview last week.
An early DOE investigation by contractor
Stone & Webster supported Laul's
termination. But Abernethy said Battelle's
legal department ``may have obstructed''
the investigation by having Battelle
lawyers present at all employee interviews
about Laul's conduct.
Laul used ``very poor judgment'' in
disposing of the chemical, but that didn't
justify firing him, Abernethy's report
said. Termination ``is a rather harsh and
unprecedented punishment for a senior
scientist that has had a distinguished
15-year career at PNL,'' he added.
The inspector general later agreed, saying
Laul's complaints to DOE about the lab
equipment led directly to his firing.
Wagoner referred the issue to an internal
Battelle committee to decide whether Laul's
treatment was consistent with DOE and
Battelle whistleblower policies.
Battelle said the committee was ``united''
in concluding Laul was fired for ``severe
misconduct,'' Koller said.
But the inspector general's report disputed
``At least half of the six committee
members found evidence of fraudulent
management of the (Battelle) lab. However,
those findings were not reported back to
John Wagoner,'' by Battelle managers, the
inspector general's report said.
The committee's legal counsel was from
Davis Wright Tremaine, the law firm
taxpayers later paid $400,000 to litigate
``This was a conflict of interest,'' Laul
said last week. Battelle's Koller said it's
``standard practice'' for Battelle to use
its outside law firm on such issues.
The DOE's inspector general report
recommended criminal sanctions against
Battelle for ``theft, conspiracy and false
``The U.S. attorney's office intends to
prosecute the violations detailed in the
July 1993 report,'' the report said.
A grand jury was convened last year in
Spokane to consider criminal charges. But
they were dropped when Laul won his Federal
False Claims Act case, forcing Battelle to
reimburse the government, said Assistant
U.S. Attorney James Crum.
Laul sued Battelle in 1993 for wrongful
termination. His claim was initially denied
in U.S. District Court in Spokane. But he
appealed to the 9th U.S. Circuit Court of
Appeals, which ruled in his favor and
ordered a jury trial.
A whistleblower trial was justified because
Laul's immediate supervisor ``drafted a
memorandum only five days before Dr. Laul's
termination calling for (his) termination
because of his complaints to the DOE,'' the
court said last June.
That's when Battelle offered to settle,
He got the inspector general reports after
he agreed in January to accept the offer.
``These reports show I could easily have
prevailed at trial,'' Laul said.
Laul is now living in Boulder, Colo. He's
taken loans against his house and depleted
his savings in his long fight with
Now, he's talking to Congress in an effort
to make his case an issue in DOE contract
``I stood up in the interest of DOE and had
Battelle pay back $330,000, and then DOE
turns around and pays back all the
litigation costs to Battelle to fight my
``This just does not make any sense,'' Laul
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