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Client’s False Claims Act Suit Leads the Commonwealth of Massachusetts to Recover $850,000 From Diesel Direct, LLC and Two of Its Executives

July 16, 2021

The Commonwealth of Massachusetts has settled a Massachusetts False Claims Act qui tam lawsuit brought by a Whistleblower Law Collaborative client against Diesel Direct, LLC and two of its executives as defendants.

Details of the Massachusetts False Claims Act Settlement

Diesel Direct, LLC, its chief executive officer, and its senior vice president will pay $850,000 to resolve allegations that the company violated the False Claims Act.  The suit alleged that Defendants knowingly delivered nonconforming petroleum diesel fuel to state agencies, but charged for a higher-priced and more environmentally-friendly Biodiesel fuel.  As Attorney General Maura Healey noted,

“By not delivering on the terms of its contracts, this company bilked Massachusetts out of taxpayer dollars and undermined our efforts to reduce harmful emissions.”

Diesel Direct also agreed not to bid on any contract with the state or its agencies for five years.

The Alleged Fraud Has Both Financial and Environmental Impacts

Biodiesel is a renewable fuel that reduces particulate matter and tailpipe emissions that contribute to global warming.  It is nontoxic, biodegradable, and suitable for sensitive environments.  Biodiesel spills are far less harmful and much less expensive to clean up than a petroleum diesel spill.

The lawsuit alleges that when state agencies ordered Biodiesel fuel from Diesel Direct, the company instead delivered nonconforming petroleum diesel fuel.  The delivered fuel did not have the environmental benefits of Biodiesel.  Yet, Diesel Direct charged the state agency for the more expensive Biodiesel.  As a result, the AG contends that Diesel Direct not only overcharged state agencies, but also caused them to consume fuel that emitted greater greenhouse gases and particulate matter into the atmosphere.

Additional Allegations

The settlement also resolves allegations that the company violated the contracts in other ways.  This includes a failure to spend two percent of its contract-based sales with minority-, women-, and/or service disabled veteran owned business enterprises.

Our Client Will Receive an Award Under the Massachusetts False Claims Act

Our courageous client brought the fraud to the attention of the government by filing a qui tam complaint under the Massachusetts False Claims Act.  Under this law, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower.  The whistleblower files a sealed complaint on behalf of the government.  If the case is successful, as here, the relator is entitled to a share of the government’s recovery.

A Notable Settlement

The settlement is notable for several reasons. First, it holds individuals within the company personally accountable.  The AG’s office contends that the company’s Senior Vice President of Operations directed employees to engage in the improper conduct.  The AG also claims that the company’s chief executive officer knew about the company’s improper actions, failed to stop the conduct, and did not disclose it to the state.

In addition, this matter is, to our knowledge, the first settlement of a whistleblower-initiated qui tam action by the Attorney General’s False Claims Division.  The False Claims Division was created by AG Healey.  Its mission is to safeguard public funds and promote integrity and accountability in public contracting.  We have written about this Division’s excellent work combatting COVID fraud here and here.

We applaud the efforts of the dedicated government attorneys, paralegals, and staff that contributed to this investigation and resolution:  Assistant Attorneys General Mary-Ellen Kennedy and Cassandra Arriaza, Special Assistant Attorney General Coleman Gay, Paralegal Cara Bradley, and False Claims Division Chief Amy Crafts.  As Erica Blachman Hitchings notes, “The AG team was tireless, pursued every avenue in pursuit of a just outcome, and worked collaboratively with us and our client.  We commend them for their diligence and for this resolution.”

A copy of the Massachusetts Attorney General’s Office press release can be viewed here.