Covan World-Wide Moving and its affiliate, Coleman American Moving Services Inc., are seeking dismissal of a federal lawsuit by the U.S. government and two whistle-blowers alleging the companies fraudulently overbilled the Department of Defense for providing moving services for military personnel.
The suit was recently unsealed in U.S. District Court in South Carolina. Coleman and Covan, both based in Midland City, Ala., specialize in moving the personal belongings of military personnel. The companies have filed a motion to dismiss the suit.
The motion says the plaintiffs have failed to make their claims specific enough to meet the threshold for a False Claims Act Suit.
According to a brief filed by Coleman and Covan, despite having had 15 months to look over 100,000 pages of company documents, the plaintiffs have only been able to identify a handful of allegedly fraudulent overweight shipments and have failed to make allegations detailed enough to meet requirements for a fraud case. Coleman and Covan’s motion also said the plaintiffs have failed to explain why the overweight shipments constituted fraud instead of a mistake or negligence.
According to a complaint filed by the federal government, two employees of the company blew the whistle on alleged fraud by Coleman and Covan. Mario H. Figueroa and Elmer A. Figueroa were Coleman employees working in Augusta, Ga. Mario was a warehouse manager who was laid off by the company in 2012. Elmer works as the operations manager for the Augusta warehouse.
The complaint says the Figueroas were pressured by company management to inflate weight amounts on billing documents in order to increase the amount the company could charge the federal government. The suit says that since 2007, management has instructed employees to inflate weights recorded on company documentation. The lawsuit alleges that the overbilling was not confined to the Augusta warehouse but was conducted throughout the company.
The complaint points to a Dothan, Ala.-area example of allegedly-fraudulent billing for a move. According to the complaint, a reweight of a shipment for Maj. Gen. Anthony G. Crutchfield, former commander of Fort Rucker, found that the weight of his possessions was 2,601 pounds less than the weight billed to the government when the company moved his belongings from Fort Rucker to Pearl Harbor.
The suit says an audit has found 437 examples of weight certificates reporting weights in excess of the corresponding warehouse locator cards.
According to the complaint, the company has billed the government for $723 million in shipping and relocation services since 2009 alone. The suit seeks treble damages, as well as civil penalties and disgorgement of profits.
In a statement released by John Coleman, an executive vice president for Covan, Coleman said the accusations brought by the Figureoas are baseless and pointed out the company’s consistently-high scores for quality by military evaluators.
“Coleman American denies the allegations in the civil complaint and believes the defense, which has been ongoing for more than one year and includes a filed motion to dismiss, will ultimately be successful,” Coleman said in the statement.
Covan and Coleman employ about 1,800 people, hundreds of whom work in the Dothan area.