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Roofing Companies Settle Federal Whistleblower Suit for $60 Million

RPM International, Inc. and its subsidiary Tremco, Inc., both based in Ohio, have agreed to settle allegations that Tremco violated the federal False Claims Act. Tremco specializes in the manufacture and sale of roofing materials and services, construction sealants, glazing and gaskets, waterproofing systems, air barrier and fire stopping systems. According to the Department of Justice, the allegations involve two multiple award schedule (“MAS”) contracts with the General Services Administration (“GSA”) for roofing supplies and services.

MAS contracts are awarded to multiple companies supplying comparable services and products at varying prices. GSA awards MAS contracts to companies for commercial items when it determines that the prices offered are “fair and reasonable.” This is determined by comparing the price or discounts that a company offers the government with the price or discounts that the company offers to its own commercial customers. Companies are required to disclose information about their commercial pricing policies and practices. Contract prices are tied to commercial practice so that GSA pricing remains competitive over time.

In 2010, Gregory Rudolph, former vice president of Tremco, filed a qui tam lawsuit alleging Tremco had violated the federal False Claims Act and numerous states’ false claims statutes by failing to provide government agencies with the same price discounts provided to non-government customers. The whistleblower also alleged that Tremco marketed more expensive products to government purchasers without disclosing the availability of the same materials from the company at a lower cost.

The companies have agreed to settle the federal portion of the lawsuit for $60.9 million. The portion of the case involving violations of the state false claims statutes of California, Delaware, Florida, Illinois, Indiana, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Tennessee, and Virginia are still pending. The whistleblower will receive approximately $10.9 million of the federal settlement proceeds as his reward under the qui tam provisions of the False Claims Act.