A North Carolina-based company providing insect-prevention treatment to Army combat uniforms settled a lawsuit alleging it had manipulated and failed to perform proper testing on garments.
Insect Shield and the estate of its co-founder, Richard Lane, who died in 2022, agreed to pay $1.4 million to resolve the case, the Justice Department announced earlier this month.
In the lawsuit, the government claimed that Insect Shield failed to follow the Army’s permethrin testing requirements between 2015 and 2021.
According to the company’s website, permethrin is an insect repellent treatment that helps protect against mosquitoes, ticks, ants, flies, chiggers and midges.
The government alleged that the company inappropriately combined results from different rounds of testing, relabeled test samples to hide the sample’s origin, violated its contract by excessively retesting and concealed failed test results.
Brett A. Shumate, assistant attorney general of the Justice Department’s civil division, described the settlement as part of their effort to “aggressively pursue those who defraud the American taxpayers by failing to properly perform required testing on goods supplied to our soldiers.”
Christopher Dillard, special agent in charge of the Mid-Atlantic Field Office for the Defense Criminal Investigative Service, added that “manipulating and failing to perform contractually required testing is not only fraudulent, but compromises military readiness.”
However, under the settlement agreement, the allegations remain unresolved as the document “is neither an admission of liability by the Estate nor a concession by the United States that its claims are not well founded.”
According to the settlement agreements, Insect Shield will pay $875,000 of the $1.4 million and Lane’s estate will pay $525,000.
The agreements come as a result of a complaint-in-intervention the government filed in December 2023.
The original case was brought in 2019 under whistleblower provisions in the False Claims Act, which allow private parties to sue on behalf of the government.
As a result, the original plaintiff, Emelia Downs, a former Insect Shield employee, will receive $315,000 as part of the settlement.
According to the complaint-in-intervention, the government could only approve and receive Army Combat Uniforms, or ACUs, after “permethrin verification testing” had been completed. In other words, if testing wasn’t completed, Insect Shield would not get paid.
“Accordingly, there was pressure for Insect Shield to expedite the test process,” the lawsuit said.
Despite the requirements, the lawsuit said Insect Shield and its late co-founder Lane were aware of “erratic” test results and even included receiving “failing [test] results” in an internal workflow diagram, but chose not to disclose this information to the government.
The government alleged that Lane and other Insect Shield employees thought the contractual requirements were “too rigorous” and “time-consuming.”
In response to the settlement agreement, Insect Shield’s attorney, D.J. O’Brien III, told The Triad Business Journal that the company has “consistently disputed the allegations” and is “proud of its decades-long, uninterrupted partnership with the U.S. Army.”
The company added that it is “pleased that it has resolved the distraction and expense of the lawsuit so that it can focus on … protecting military personnel and other customers from insect-borne diseases.”
Read the full article here