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Data: EXography

EXography: Feds paying record amounts in lawsuits

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Watchdog,Treasury,Federal Budget,EXography,Luke Rosiak

A record $2.9 billion was paid last year by the federal government to parties that sued it, and Washington is on pace to surpass that amount again this year, according to a Washington Examiner analysis of court records.

During President George W. Bush's administration, total annual payouts ranged from only $649 million to $1.06 billion. The judgments are paid out when contractors or citizens successfully argue in court that an agency erred or violated the law.

The number of successful suits against the government has remained relatively steady at about 6,000 per year, but by July 2013, there were already nearly 5,000 payouts this year, putting 2013 on pace to be the second-highest year on record when it comes to number of suits.

Due to oddities in federal accounting, the largest single settlement is not yet reflected in the data, thus positioning 2013 to be by a record year in dollar terms by a wide margin. A settlement between the Interior Department and Native Americans awarded $3.4 billion after Native Americans argued that the government was mismanaging their money and withholding revenue.

In 2011, the Agriculture Department paid $760 million in a class-action lawsuit alleging racial discrimination in its farm loan program.

Some payments are the result of agitation by federal employees looking for money they say is owed to them.

Nearly $100 million has been paid out since 2012 for attorneys' fees in Fair Labor Standards Act claims against the federal government, and $15 million for discrimination in federal employment.

Last year, a judge awarded $73 million to a class of Veterans Affairs employees who sued the government for back pay and attorneys' fees. A judge found that "the VA violated federal pay statutes by failing to pay" 25 percent premiums for weekend work when employees took vacation or sick days on weekends.

The rise could be in part due to an increasingly litigant culture, and citizens and trial lawyers who see the government as a juicy target.

When Shawn L. Brown, for example, was driving in D.C. and was involved in a car accident with a Securities and Exchange Commission employee, he sued the government -- not the individual driving -- for $500,000. (Brown received $130,000.)

Activist groups seeking regulatory rule changes usually don't sue for monetary damages, but they still often walk away with court fees.

"Many of those are what I call collusive litigation, where, say, environmental groups will sue and the government will immediately settle. This is the easiest way to get around regulations that were done by a prior administration," said Hans von Spakovsky, a former political appointee who studies the courts at the Heritage Foundation.

The group Defenders of Wildlife sued the Interior Department and persuaded the court to write that "the Defendants have offered no rational explanation to justify adoption of these regulations," allowing the group to affect federal regulations outside the traditional rulemaking process, wherein comment is solicited from the public, and awarding it $18,000 in lawyers' fees for the trouble.

The law makes it easier for a judge to require the government to pay a successful plaintiff's legal bills, and the government has paid at least $233 million for lawyers representing plaintiffs over the last decade.

Other times, taxpayers were on the hook because the government failed to do things it had promised to do.

In most cases other than contract disputes, the agencies are not financially responsible for the bill, which is picked up by the "judgment fund," a "permanent, indefinite appropriation available to pay final money judgments and awards against the United States" administered by the Treasury.

That gives agencies little incentive to tread carefully, critics say.

Congress partially acknowledged as much in 2002 when it began requiring agencies to reimburse the Treasury for whistleblower retaliation judgments, which totalled $44 million between 2004 and 2006, according to a Government Accountability Office study.

But while payouts totalled $15 billion over the last decade, the agencies at fault reimbursed the Treasury for only $1.7 billion.

"I've been in the federal government. It's the worst bureaucracy where people take actions because there are no consequences," von Spakovsky said.

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