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KBR Appeal Dismissed by Fifth Circuit Court of Appeals

The United States Fifth Circuit Court of Appeals has dismissed KBR’s interlocutory appeal in McManaway, et al, v KBR, Inc.,et al as premature until a determination of controlling law has been made. In the appeal, KBR contended the case should be dismissed as barred under the political question doctrine and preempted by the combatant-activities exception to the Federal Tort Claims Act (FTCA).  The appeal was dismissed without prejudice. Click here to read the decision.

McManaway, et al, v KBR, Inc.,et al involves dozens of Indiana, West Virginia, South Carolina, and British veterans. The plaintiffs have sued the Houston-based military contractor over health problems they blame on exposure to hexavalent chromium dust, a carcinogenic orange-yellow powder used to fight corrosion in water pipes. The troops were guarding KBR workers as they tried to restore water treatment facilities at the Qarmat Ali water treatment site.

United States District Judge Vanessa Gilmore is presiding over the case in the Southern District of Texas. Judge Gilmore denied the immunity defense last year. After denying KBR’s immunity motions, the court permitted the immunity defense decision to go on interlocutory appeal to the Fifth Circuit in September 2012. In November 2012, a decision was made by a jury in Oregon in Bixby, et al, v KBR, Inc., et al, a case involving the same circumstances as McManaway, et al, v KBR, Inc.,et al, determining KBR was negligent and awarded the veterans $85 million. The court later affirmed the jury decision in the amount of $81 million.

At this time, Judge Gilmore will decide on when and how to proceed to trial for the Texas cases. It is anticipated that KBR will ask for reconsideration by the Court of Appeals.

Oral Argument Underway in McManaway et al v KBR

Oral argument is underway in Sergeant Mark McManaway et al. v. KBR Inc., et al before the United States Fifth Circuit Court of Appeals.  The court will consider KBR’s bid for blanket immunity for acts of misconduct committed during their work in Iraq and that resulted in a toxic contamination to hundreds of United States and British soldiers.  Just two weeks before trial was set to  begin in federal court in Houston, U.S. District Judge Vanessa Gilmore denied KBR’s immunity motions and the issue was appealed.  Since then, a bellwether group of twelve soldier’s claims went to trial in federal court in Oregon, and resulted in a judgment of $81 million against KBR.  Bloomberg News profiled the case in an article this morning, and identified the issues to be addressed by the Fifth Circuit panel.  A recording of the oral argument is expected to be available later today or tomorrow [http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx].

Army Gives KBR Rare Ultimatum for Fixed Price Contract Revision; Tension Mount

Federal Times has reported on the mounting tensions between contractor KBR Inc. and the US Army over an ultimatum to provide a firm, fixed price on remaining work to close out the $38 billion Logistics Civil Augmentation Program (LOGCAP) III.

LOGCAP III is the 12-year-old logistics contract that has supported US military logistics operations in Iraq. The Army awarded the contract in 2001 and issued 160 tasks for everything from dining services to delivery of housing for civilian and military personnel. The original contract was considered a “cost plus” contract, which means KBR was paid its costs plus a guaranteed profit; the Army seeks to revise the pricing terms on the final work to be done on the contract to be firm, fixed pricing. KBR filed a lawsuit in response seeking to keep the “cost plus” nature of the contract.

The dispute started in July 2012, at that time the Army decided contract closeout activities must be performed on a fixed-price basis meaning KBR would need to provide a fixed dollar figure for the remaining work and absorb any excess costs. KBR responded they were unwilling to accept that due to the lack of scope or duration of work that needs to be completed.

KBR filed a case with the Government Accountability Office that was thrown out on jurisdictional grounds. The case was refiled in the US Court of Federal Claims and accused the Army of using the wrong type of contract, acting in bad faith and violating procurement regulations.

In emails submitted as part of the lawsuit, Army contracting officer Robert Egan told KBR he would not “enter further communication exchanges with” KBR’s contract team until he saw the FFP deliverable. KBR responded they were unwilling to accept such a proposal. KBR responded to Federal Times with a statement noting the company enjoys “frank, open and continuous communications with the Army.”

KBR has been paid enormous amounts for well

VA Qarmat Ali Registry Available to Veterans Exposed to Hexavalent Chromium

The Department of Veterans Affairs has released information pertaining to the registries for chromium exposure at Qarmat Ali water treatment facility. The registry is important for continued health monitoring for veterans who may served at Qarmat Ali and have current health conditions or may develop conditions in the future.

Veterans who served at Qarmat Ali and the Gulf War should also participate in the Gulf War registry. Veterans who participate in the program will receive an initial exam, chest X-ray and pulmonary function test. The results will be tracked in the VA’s Gulf War Registry.

Important points about registry health exams:

Free to eligible Veterans and no co-payment Not a disability compensation exam or required for other VA benefits Enrollment in VA’s health care system not necessary Based on Veterans’ recollection of service, not on their military records Veterans can receive additional registry exams, if new problems develop

Veterans should contact their local program manager to make an appointment to enroll In the VA Qarmat Ali Medical Surveillance Program. Click here for a team locator.

We encourage all veterans who served at Qarmat Ali to join these registries. A burn pit registry is also being created. The registry was part of an improvement act signed on January 10, 2013, and gives the VA one year from signing to create the burn pit registry. We will continue to share updates as they develop.

Former VA Researcher Testifies Before House Committee about Burn Pit Research Cover-up

A former Veterans Affairs researcher testified before the House Committee on Veterans Affairs this week about the organization’s efforts to minimize research that supports claims of Gulf War Illness and illness from burn pit exposure.

Steven Coughlin was an epidemiologist in the VA’s public health department until he resigned over a request to retract his claims concerning the concealed information and admit he had made a mistake. Coughlin also said “if the studies produce results that do not support the office of public health’s unwritten policy, they do not release them. “ He also testified about a panel of outside experts hired to study neurological connections to Gulf War illness for the Institute of Medicine. Coughlin maintains the panel was stacked in favor of those who believe Gulf War illness is psychological rather than neurological. Coughlin added “anything that supports the position that Gulf War illness is a neurological condition is unlikely to ever be published.”

Coughlin’s allegations were countered by Victoria Davey, chief officer of VA’s office of public health and environmental hazards. Davey never directly addressed the accusations levied against the VA but talked about the “cutting-edge” research the VA has conducted.

Coughlin was backed by Lea Steele, a researcher at the Veterans Health Research Program at Baylor University who said the VA has not managed an effective program. Steele echoed Coughlin when she said “studies consistently show Gulf War illness is not due to war trauma.”

Steele referenced the panel Coughlin viewed as stacked in favor of Gulf War illness as a psychological illness. The panel studied veterans from the past 20 years rather than a segment of Gulf War veterans. The symptoms of this broad group were lumped together so that neither cause nor treatment for “chronic multisymptom illness” could be found. Steele likened this to “medical malpractice”.

A Gulf War veteran and appointed member of the Congressionally Directed Gulf War Illness Research Medical Program,

KBR Trial Update: Judge to Rule on Jurisdiction, New Trial Motions

The presiding judge in the Oregon litigation pitting veterans of the Oregon National Guard against military contractor, KBR, heard motions this week concerning the company’s attempts to overturn the jury verdict and obtain a new trial.

KBR’s request for the verdict to be overturned is another disregard of this country’s legal system. The jury pool became the voice of the community when they issued their verdict. A group comprised of responsible citizens of Oregon decided that KBR’s behavior was reprehensible and that there was evidence of wanton misconduct, establishing the veterans right to recover punitive damages.  KBR’s wanton misconduct included falsely telling a commander that his soldiers had no reason to be concerned about the presence of sodium dichromate and referred to it as a mild irritant.

KBR also requested that the jury verdict amount be decreased claiming insufficient evidence of damages. The tone of the argument was aimed at labeling the veterans as a complainers who should be able to withstand the fear of their current and future illness by virtue of being soldiers who had signed up to protect and serve their country in Iraq… Sodium dichromate causes a variety of skin, digestive, and respiratory illnesses, among others, and genetic transformation from which the body may or may not heal itself once exposed. Essentially the soldiers are left not knowing whether they may develop serious illness in the future, including cancer.

The company also brought up the issue of personal jurisdiction, arguing that Oregon is not the appropriate venue for the case. All plaintiffs were members of the Oregon National Guard and were residents of Oregon at all relevant times. The record is replete with evidence that KBR directed intentional acts on Oregon residents, including intentional misstatements about sodium dichromate that were given to a commanding officer who then passed that information on to soldiers serving under him. Once the intentional act has been proven, all the Oregon

KBR’s Fourth-Quarter Profits Drop 67 Percent

KBR reported a net income of $30 million for the fourth-quarter of 2012. Chief Executive Officer Bill Utt called it “a disappointing year” but later stated 2013 would bring “a robust series of new opportunities across each of our business units.”

For the same period a year earlier, KBR reported profits of $90 million. Utt accredited the sharp decline in profits to difficulties in the company’s minerals and US construction businesses. The sector of the company that did perform well was the hydrocarbons arm. Its profits increased 76 percent from the same period a year earlier resulting in a $174 million net income.

Interestingly, the released statement made no mention of the current litigation against KBR. In November, a jury awarded $85 million to twelve Oregon Army National Guard soldiers for negligence due to the contamination of a water treatment plant in Iraq. KBR, in turn, sued the US government to honor a secret indemnity agreement signed by the secretary of the Army in 2001. The agreement purports to shield KBR from financial costs associated with unusually hazardous risks including “sudden or non-sudden release of hydrocarbons or other toxic or hazardous substances or contaminants into the environment.”

They also did not mention the lawsuit filed by the United States in November. In that civil complaint, the government accuses KBR of inflating claims for the delivery and installation of trailers to house troops in Iraq.

The jury verdict for the twelve plaintiffs in Oregon is significant for the role it will play in the future trials for the more than 150 soldiers awaiting their day in court. The financial impact for KBR potentially could be more than $1.1 billion if the current individual case value trend of $7 million continues. The case is currently being reviewed by the Department of Justice and the Department of Defense. We will continue to blog updates as they develop.

Huffington Post Acquires KBR’s Indemnity Clause, Authorization Came from Former Enron Exec

Through the Freedom of Information Act, The Huffington Post reported today that it has acquired the signed indemnity agreement between the United States Army and KBR (at the time known as Kellogg, Brown, and Root).

The Army official that signed the agreement at the insistence of the Houston-based private contractor was a former Enron executive. Thomas E. White was named secretary of the Army in 2001. He signed the agreement on March 19, 2003 after considering “the availability, costs and terms of private insurance to cover these risks, as well as the viability of self-insurance, and have concluded that adequate insurance to cover the unusually hazardous risks is not reasonably available.” His memo concluded that the use of the “indemnification clause in this contract will facilitate the national defense.”  There is no indication that KBR disclosed at the time of the contract-add any information or knowledge KBR had about the longstanding, widespread use of hexavalent chromium at Qarmat Ali, or any other specific hazard to the troops and other men on the ground at KBR’s work sites.

White resigned his position as secretary on April 23, 2003 amid questions about his ties to Enron Corp. He sold millions of dollars in stock in 2001 and claimed it was a requirement under government ethics rules. White and his wife were also investigated by the Pentagon’s inspector general for using a military jet for personal travel.

The language of the no-bid, cost-plus with award fee contract relates to the bellwether trial against KBR in Oregon where 12 veterans were awarded more than $85 million in damages stemming from KBR’s knowing exposure of the men to hexavalent chromium at Qarmat Ali. The additional “bailout” agreement, which was demanded by KBR after initially grabbing the multi-billion dollar no-bid, cost-plus award fee contract for Iraqi oilfield reconstruction, purports to shield the company from various liabilities, including financial costs associated with unusually hazardous risks including

Mike Doyle Discusses the KBR Verdict on Current TV

Mike Doyle appeared on Current TV’s top rated show “The Young Turks with Cenk Uygur” to discuss the $85 million verdict against KBR and the secret indemnity agreement.

Click here to watch the segment.



Huffington Post Covers KBR’s Motion for Government to Foot Bill

The Huffington Post published an article concerning the indemnity agreement between KBR and the government. KBR has sued the government for indemnity arising out of the $85 million verdict in favor of 12 soldiers exposed to sodium dichromate in Iraq while protecting KBR engineers repairing a water treatment facility.

The Huffington Post’s front page headline of “We Poison, You Pay” is a concise summary of KBR’s apparent legal position. And while KBR presses the government for indemnity, they seem to be unwilling to disclose the full terms of their indemnity sweetheart deal to the public.  Beyond seeking indemnification for their liability to our soldiers, KBR is also demanding that the government pay their legal fees,which so far total more than $15 million.

The verdict involved a bellwether group of the first 12 of 162 soldiers we are proud to represent.  With an average case award of over $7 million, KBR faces an exposure of over $1 billion for their misconduct in Iraq.  Unfortunately, despite the verdict, and the public outcry as evidenced by the thousands of comments made in response to the Huffington Post article, KBR’s behavior seems to continue to worsen.

Click here to read the article in its entirety.

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