GE Hitachi Steam Dryer Modeling Settlement: Reliable Data Was the Claim

GE Hitachi agreed to a $2.7 million settlement over allegations that it concealed steam dryer modeling flaws and falsely claimed to have verified its model with reliable data while receiving DOE funding. If you worked on the analysis, reviewed the supporting data or handled the funding records, the gap between the technical work and the assurance sent to the agencies is the heart of this case.

The Justice Department announced the settlement on January 23, 2014. It identified General Electric Hitachi Nuclear Energy Americas LLC as the settling company, a provider of nuclear energy products and services headquartered in Wilmington, North Carolina. A former GE Hitachi employee brought the False Claims Act case.

This energy fraud case follows the steam-dryer analysis into federally funded reactor development and design certification. The broader DOE funding framework explains how approved work, cost sharing and payment fit together.

What Was the Steam Dryer Model Supposed to Show?

The steam dryer analysis was supposed to demonstrate that vibrations caused by the component would not damage a nuclear plant. The Justice Department’s announcement explains that a steam dryer removes liquid water droplets from steam produced by the nuclear reaction in boiling-water reactors. GE Hitachi’s analysis concerned the Economic Simplified Boiling-Water Reactor.

The Nuclear Regulatory Commission required applicants for reactor design certification to make that demonstration. The alleged deception concerned both the analysis and what GE Hitachi said it had done to check it. The Justice Department described the accusation this way:

Someone who reviewed the verification work may know which data supported the assurance. Someone who raised a technical concern may know when the problem reached the people responsible for the submission. The Justice Department alleged that GE Hitachi concealed known flaws while claiming to have verified the model’s accuracy. We call that quality control with the awkward part left out.

How Did DOE Cost Sharing Put the Model Into a Payment Story?

The Department of Energy helped pay for the development, engineering and design certification of the reactor. Between 2007 and 2012, GE Hitachi received Department of Energy funding to cover up to half of those costs. That public contribution connects the technical assurance to taxpayer money.

The Department of Energy funded the work, while the Nuclear Regulatory Commission reviewed the application for design certification. The Justice Department alleged false statements to both agencies about the steam dryer.

For someone working in project finance, the development agreement is where the technical and financial files meet. We match a disputed technical statement to the terms governing the funded work at the time, then to the request for payment and the agency’s decision. An engineer may know the model version used in a report. A project administrator may know which funded work package or payment request relied on that report.

What Did the GE Hitachi Settlement Resolve?

The settlement resolved False Claims Act allegations about false statements and claims to the Department of Energy and the Nuclear Regulatory Commission concerning the advanced reactor design. The Justice Department traced those allegations to the former employee’s whistleblower lawsuit. The case concerned the company’s representations about the analysis and verification work supporting the design.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess the technical facts and funding records with you, including how a whistleblower reward fits the case.

Which Records Connect the Steam Dryer Analysis to the Funding?

The useful evidence connects the underlying data, the model, the assurance and the payment. We work with the insider to follow those connections through the files and the people who used them.

For an engineer or model reviewer, the starting point is the version of the analysis behind the representation. The input data, verification work and review comments explain what supported that version and what concerns remained.

For someone who raised or received a warning, the timing and recipients matter. A dated review comment can connect a specific flaw to the people who knew about it before an assurance went out. The submitted report and any correction communications then show what the agency was told. That comparison gives substance to an allegation that a known problem was concealed.

For a funding administrator or project accountant, the award, amendments, approved costs and payment requests connect the technical work to the Department of Energy’s financial participation. The agency’s decision and payment entry complete that part of the account. We examine those records alongside the model and its review history, so the technical concern remains tied to the work the government funded.

These are different views of the same transaction. You may know why a dataset was challenged, who approved a report or which request used it, while another participant handled the financial record. Our work is to connect that knowledge into a case with energy fraud whistleblower lawyers who understand funded technical development.

A Technical Assurance Can Also Support a Federal Loan

Omega Protein illustrates the same public-money connection through a different instrument. In its civil settlement announcement, the Justice Department alleged that a false environmental-compliance certification helped obtain a $10 million Commerce Department loan. Omega Protein agreed to a $1 million settlement of those False Claims Act allegations.

The comparison is the role of the assurance in the financing. GE Hitachi’s case concerned statements about analysis and verification during DOE-funded development, while Omega’s concerned a compliance certification used to obtain a loan. In either setting, the insider’s knowledge becomes useful when it explains the difference between the underlying work or conditions and the statement supporting public funding.

You Know What Was Behind the Assurance

If you know why a nuclear-development model was presented as verified despite an unresolved problem, speak to one of our whistleblower experts about what the technical review showed. We build the funding case with you and bring in nuclear-development fraud whistleblower lawyers who can connect the engineering record to the government’s claim. We stay beside you as your knowledge becomes the evidence behind that case.