Whistle-Blower Says McDonnell Seeks to Settle Suit

McDonnell Douglas is preparing to settle for several hundred thousand dollars a civil lawsuit alleging that the firm overcharged the Army for attack helicopters, according to Rod Stillwell, the plaintiff in the case.

Stillwell, a former subcontracts administrator at McDonnell Douglas Helicopter Co., sued the firm in 1987 under the federal False Claims Act. Stillwell alleged that the company had overcharged the Army by $1.1 million on subcontracts for the Apache attack helicopter. He later amended the case and raised the alleged damages to $750 million.

McDonnell officials declined to comment on whether the firm is negotiating to settle with Stillwell. McDonnell lost an effort in the Stillwell case earlier this year to have the False Claims Act declared unconstitutional.

“McDonnell currently is pursuing pretrial appeals, one having to do with the retroactive application of the 1986 changes in the law and the second one being the constitutionality of the changes,” a spokesman said.

All Major Issues Resolved

William Ramsey, Stillwell’s Encino attorney, confirmed that he is negotiating to settle the case, but declined to discuss specifics.

Stillwell said McDonnell has agreed to pay nearly a half million dollars and that all major issues have been resolved. The Justice Department is reviewing the settlement, because the government must consent to dismissal under the law.

The False Claims Act gives the government the right to join the case as a plaintiff and share in the recovery. The Justice Department last year agreed to join the case and later withdrew, saying it could not establish that the government had been injured.

A Justice Department official acknowledged that it is reviewing a proposed settlement in the case but that no decision has been reached. Under the proposed settlement, the cash damages would go to Stillwell, and McDonnell would not charge the government for certain of its legal expenses, according to Stillwell.