Getnick & Getnick Whistleblower Case Against National Grid Electric Services Leads to $6M Recovery for New York State

Getnick & Getnick LLP, along with the New York Attorney General’s Office, has secured a settlement in a groundbreaking whistleblower case against National Grid, a utility company that provides natural gas and electricity to homes and businesses in New York, Rhode Island and Massachusetts, as well as electrical services in other areas of the Northeast. This resolution, addressing National Grid’s alleged failure to properly manage New York State’s electrical distribution system on Long Island and the Rockaway Peninsula, marks the first time that the New York False Claims Act has been applied to an electrical utility company. New York Attorney General Letitia James today announced the $6 million recovery from National Grid Electric Services LLC.

Getnick & Getnick LLP represents the whistleblower in the case. The whistleblower, whose identity remains protected, will receive 23.5 percent of the government’s recovery in today’s settlement. This is the largest percentage that has been paid in any non-Medicaid New York False Claims Act case in which the State has elected to supersede. Getnick & Getnick achieved the same percentage award for another whistleblower client in a prior case.

According to the Settlement Agreement, from 2007 through 2013, National Grid’s contractual obligations to New York State included rendering bills to customers, collecting payments from customers, and remitting those payments to the State by paying them to the Long Island Power Authority (“LIPA”). LIPA is the not-for-profit public utility that owns the electricity transmission and distribution system on Long Island. It provides electricity to more than 1.1 million residential and commercial customers in Nassau and Suffolk counties, and on the Rockaway Peninsula of Queens.

The Settlement Agreement explains that National Grid failed to meet its obligations by allowing excessive “Advanced Consumption” and reported falsely to LIPA about it. Advanced Consumption occurs when electricity flows to a location, but no one is billed for it or pays for it. While there are instances where limited Advanced Consumption occurs in the normal course of a utility’s business, for example, in the transition between successive tenants in a rental property, what the whistleblower alleged in this case was a multi-million dollar fraud where National Grid mismanaged the State’s electricity and then made false reports to LIPA to cover up its conduct. LIPA was harmed, as were all National Grid customers who diligently paid their electric bills.

The Settlement Agreement describes and provides examples of the false and misleading information that National Grid presented to LIPA on a monthly basis beginning in April 2008 and continuing through August 2012. For example:

• In 2012, following a report that “all accounts were completed” in February and anticipated to be completed in March, National Grid’s internal database showed at least 3,639 unresolved Advanced Consumption accounts in June. (See, Settlement Agreement, ¶ 8.)

• “National Grid employees knew . . . that National Grid’s reporting presented an inaccurate picture to LIPA. For example, on June 7, 2012 a National Grid manager who was responsible for generating the reports to LIPA on advance consumption admitted to other National Grid employees that although National Grid was ‘reporting on a monthly basis that we are completing’ certain advance consumption accounts, those accounts were ‘not complete from LIPA’s perspective, because [they are] still advancing.’” (See, Settlement Agreement, ¶ 9.)

• The same National Grid manager “repeatedly conceded that National Grid’s reports to LIPA regarding advance consumption were ‘not true.’” (See, Settlement Agreement, ¶ 9.)

Getnick & Getnick partners Margaret Finerty, Richard Dircks, and Neil Getnick, together with Counsel Stuart Altschuler, worked closely with the Attorney General’s Office in the prosecution and resolution of this case. Getnick & Getnick would like to recognize the many years devoted to this matter by the Attorney General’s Office and its Taxpayer Protection Bureau. This is yet another example of a successful public/private partnership under the New York False Claims Act.

Partner Margaret Finerty, a former NYC Criminal Court Judge and former Deputy Chief of the Manhattan District Attorney’s Office Frauds Bureau, stated: “Public utilities hold a unique position of trust in our society and directly impact the lives of their customers. This case makes plain that when that trust is violated in New York State, there will be meaningful consequences.”

Partner Richard Dircks said: “We commend our whistleblower client for the courage to bring this action, and the determination, persistence, and integrity to see it through to a successful conclusion for the benefit of all New Yorkers.”

Managing Partner Neil Getnick noted: “Today’s settlement exemplifies the strength of the New York False Claims Act as a force multiplier, empowering whistleblowers with the means to hold even the largest entities accountable for corporate misconduct, and rewarding them for their efforts.”

Today’s press release from the New York Attorney General, that includes a link to the settlement agreement, can be accessed here: Attorney General James Secures $6 Million From National Grid to Assist Low-Income Long Islanders | New York State Attorney General (ny.gov)

Getnick & Getnick is a boutique law firm dedicated to fighting fraud and promoting business integrity. The firm works with whistleblowers, government agencies, and companies, guided by the principle that anti-fraud is pro-business. The firm’s whistleblower cases have recovered more than $1 billion for taxpayers, and its clients have received record awards, including the largest ever award for a single whistleblower.

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