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States and water districts join qui tam suit against PVC pipe manufacturer

By Phillips & Cohen LLP

A whistleblower lawsuit accuses J-M Manufacturing, the corporate predecessor of JM Eagle, of supplying defective PVC pipe to states and municipalities across the country. Nevada, Virginia, Delaware, Tennessee and thirty-nine California municipalities and water districts have joined the suit.

The suit alleges that from at least 1996 through 2005 the majority of the PVC pipe J-M Manufacturing manufactured and sold had "tensile strength" below the minimum required by applicable industry standards and J-M's contracts. These pipes, used in water and sewer systems that are mostly owned and operated by municipalities and public water districts, would have a shorter life span, are more likely to fail and will need to be replaced more quickly than pipes manufactured to specification.

According to the whistleblower, John Hendrix, J-M deceived its customers by cherry-picking the pipe samples tested by outside certification agencies such as Underwriters Laboratories (UL), International Plumbing and Mechanical Officials and NSF International, while continuing in its day-to-day operations to use a cheaper manufacturing process that produced weaker pipes but enabled the company to increase its profits.

The New York Times reported on the developments.

Full post as published by False Claims Act - Qui Tam on February 16, 2010 (boomark / email).