United Technologies Overbilled U.S., Whistle-Blower Says

United Technologies Corp. (UTX) and three units overbilled the U.S. for a Navy contract obtained in 2006, according to a whistle-blower lawsuit unsealed by a federal court in Milwaukee and backed in part by the government.

The complaint was filed by a former assistant controller for UTC’s Derco Aerospace unit in 2011. Her lawyer, Nola Hitchcock Cross, said in a phone interview that damages are about $50 million. If proven, they could be tripled under U.S. law.

Whistle-blower Mary Patzer’s 2011 complaint was unsealed by U.S. District Judge Rudolph Randa on Aug. 12, four days after the federal government said in a filing that it would join the case against UTC’s Sikorsky Aircraft, Sikorsky Support Services and Derco units.

“Defendants knowingly defrauded the United States government,” Patzer said in her complaint, “by verifying pay and billing practices which defendants knew to be false.”

Hartford, Connecticut-based United Technologies and its units make helicopters, elevators, jet engines and aerospace and military defense products. Paul Jackson, a spokesman for Sikorsky Aircraft, said the allegations have “no merit” and that the company will fight the suit “vigorously.”

Randa gave the U.S. 60 days to file its own complaint. The False Claims Act permits citizens to sue on behalf of the government and share in any recovery.

Navy Contract

Patzer claims the companies submitted to the Defense Department bills that included a 20 percent profit mark-up that was prohibited under the Navy’s contract.

The billing, which originated with Derco, was then submitted for payment by Sikorsky Support Services and Sikorsky Aircraft, according to the complaint.

Patzer said she was fired in 2010 after bringing the overbilling to the attention of a Sikorsky accounting manager. Derco said her position was being eliminated “due to a reduction in force,” according to the complaint.

In addition to compensatory damages, the companies could be fined at least $5,000 for each proven violation of federal false claims law.

The case is U.S. ex. rel Patzer v. United Technologies Corp., 11-cv-560, U.S. District Court, Eastern District of Wisconsin (Milwaukee).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net David Glovin, Andrew Dunn

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