Megan K. Mechak
Tue, 07/26/2022
The Department of Justice announced settlement of a high-profile False Claims Act lawsuit against Aerojet Rocketdyne. The lawsuit, filed by former employee Brian Markus, alleged the company misled the federal government about its efforts to safeguard controlled unclassified information from cybersecurity threats. Markus alleged that he was unsuccessful in using internal processes to convince the company to meet its federal cybersecurity obligations and was terminated after refusing to sign documents falsely claiming the company had met its obligations.
The False Claims Act is a whistleblower law allows private citizens to sue companies that are defrauding the government. Litigants may recover damages and penalties on the government’s behalf. The False Claims Act protects employees who report possible fraud from discrimination, harassment, and discipline. Private parties (called “relators”) who prevail are entitled to receive a portion of any recovery.
The settlement, which was reached on the second day of a jury trial, totals $9 million, of which Markus receives $2.61 million, according to DOJ.
DOJ initially declined to intervene in the litigation. In May 2019, a District Court judge refused to dismiss the case, finding that compliance with requirements for safeguarding information was important to the government’s decision to pay the company. It was the first time a court held that an alleged failure to meet cybersecurity requirements could from the basis for a False Claims Act suit.
In October 2021, the DOJ announced its Civil Cyber-Fraud Initiative, aimed at holding entities or individuals that put U.S. information or systems at risk through deficient cybersecurity practices.
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