A  Tennessee road and bridge builder has agreed to pay $2.25 million to settle a whistle-blower lawsuit that accused the firm of fraud by putting its own employees on the payroll of a dis­advantaged business enterprise it used to get contracts for 12 projects in Tennessee.

Mountain States Contractors LLC, an affiliate of Jones Brothers Inc., Mt. Juliet, Tenn., also will be in a monitoring agreement with the Federal Highway Administration, says a May 16 announcement by the acting U.S. Attorney for the Middle District of Tennessee.

The government claimed Mountain States and HMA Contractors LLC, prime contractors that shared the same address as Jones Brothers, subcontracted with G&M Associates as a disadvantaged business enterprise (DBE) for 11 state road projects and one airport job.

The U.S. attorney also charged that employees were “loaned” to G&M to do and be paid for the DBE work, even though Mountain States and HMA covered their health insurance, and that the two companies also “improperly leased” equipment to G&M to meet DBE goals. The alleged fraud occurred between 2007 and 2014, according to documents.

The whistle-blower was Ron Meadows, a 20-year Mountain States employee who was fired in 2011 after complaining to the company and state inspectors. He was awarded $500,000, plus $8,363.20 for expenses and costs. Neither he nor his attorney could be reached for comment. Meadows in a 2012 lawsuit charged that he and other workers were put on the G&M payroll, even though they had not applied or agreed to work at the firm. 

In a statement, Mountain States said it was “pleased this matter has been settled for an amount that it would have cost to further litigate it, and we continue to believe we have complied with all the [DBE] laws and regulations.”

“Mountain States fully cooperated with the inquiry from the first day we learned of it nearly two years ago, providing hundreds of documents to the government,” the firm said. In the agreement, the company does not admit guilt and specifically denies putting its employees on the G&M payroll.

In separate previous enforcement actions, Mountain States was fined $60,000 last year after an administrative law judge upheld and increased a U.S. Occupational Safety and Health Administration fine for safety violations. The contractor and another affiliated company, Britton Bridge LLC, were issued a statewide work-suspension notice by the Tennessee Dept. of Transportation in 2011, after two fatalities occurred four months apart on a Knoxville bridge job. The state OSHA also fined Mountain States $135,000 in 2005, after a fatal trench collapse.

Mountain States, Jones Brothers, HMA Contractors and other affiliated companies currently are working with the state DOT on 14 contracts that have a total value of $84.8 million. “We are not currently seeking to drop any of the affiliated companies from our list of qualified bidders,” a TDOT spokesperson told ENR, adding that the firm remains under a state safety-compliance agreement following the worksite deaths.