Company Settles with Government Over Failure to Notify of Defect

Company Settles with Government Over Failure to Notify of Defect

In the summer of 2018, 3M agreed to pay $9.1 million to the U.S. government to resolve allegations that it willingly and knowingly sold defective earbuds to the Defense Logistics Agency.

The whistleblower, Moldex-Metric, Inc., alleged that 3M and its predecessor Aearo Technologies knew about the defect since 2000 but withheld the information, even after becoming the sole provider of earplugs to thousands of servicemen and women, from the government.

According to a press release from Acting Assistant Attorney General Chad Readler of the Justice Department's Civil Division, the allegations were brought against 3M through the False Claims Act. Established during the Civil War, the False Claims Act is a federal statute that allows for criminal and civil penalties for "falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government."

"In addition to damages directly associated with the contractual cost of the earplugs," the complaint stated, "The United States has been damaged by the large and ongoing medical costs associated with treating veterans who likely suffered hearing damage and impairment as a result of the defective earplugs."

As part of the settlement, Moldex-Metrix, Inc., received $1.9 million.

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