FOLLOW US

The U.S. Supreme Court on Monday refused to weigh in on a lawsuit alleging that a NASA contractor inflated labor costs, leaving intact the Sixth Circuit and lower court dismissals after the federal government opted not to intervene.

Whistleblower Seeks Relief After Years of Legal Battle

Ohio-based USN4U LLC, owned by a former Wolf Creek Federal Services employee, petitioned the high court to revisit the Sixth Circuit’s ruling. The appeals court had upheld the dismissal of USN4U’s False Claims Act lawsuit, which claimed Wolf Creek overcharged the government for labor under contracts at the NASA Glenn Research Facility in Cleveland.

USN4U argued the Sixth Circuit’s decision clashed with the Supreme Court’s 2023 Polansky ruling, which emphasized that district courts must consider a whistleblower’s “substantial time and money” commitment before dismissing a case. The company also contended the appellate court improperly sanctioned interference with prosecutorial discretion, violating the U.S. Constitution’s separation of powers.

Supreme Court Leaves Dismissal in Place

As is customary, the Supreme Court offered no explanation for declining the case.

Attorney Warner Mendenhall of Mendenhall Law Group, representing USN4U, expressed frustration, highlighting the extensive resources invested. “We wish the court had recognized the significant effort relators put into these cases,” Mendenhall told Law360. “To have your legs taken out from under you after hundreds of hours and tens of thousands of dollars is deeply disappointing.”

Discovery Reveals $1.3 Million Overpayment

The lawsuit traces back to 2017, when USN4U alleged Wolf Creek intentionally inflated labor estimates. After the government declined to intervene in 2019, the district court dismissed the case in 2020 for failure to state a claim. Two years later, the Sixth Circuit reversed and remanded for discovery.

During fact and expert discovery between June 2022 and August 2023, USN4U reported incurring hundreds of attorney hours and tens of thousands in expert costs. The findings suggested that while Wolf Creek billed for 45,798 labor hours across 658 jobs, it had actually incurred only 22,929 hours, resulting in $1.3 million in overpayments by the government.

Government Moves to Dismiss, Courts Agree

U.S. District Judge Dan A. Polster later ordered the government to decide whether to take over the case or move for dismissal, citing concerns about USN4U acting as a federal representative. In November 2023, the government filed to dismiss, arguing that it would otherwise face substantial oversight obligations. The judge granted the motion, and the Sixth Circuit affirmed in March.

Representation

USN4U is represented by Warner Mendenhall of Mendenhall Law Group.
The government was represented by Maxwell A. Baldi of the U.S. Department of Justice.
Wolf Creek’s counsel included Philip S. Kushner, Michael R. Hamed, and Brandon Mordue of Kushner & Hamed Co. LPA.