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Norwich, Conn., solo Timothy C. Spayne has paid the federal government $1.24 million to settle allegations that he billed Groton, Conn.-based Electric Boat for up to 94 hours in a single day for representing EB employees in workers’ compensation cases. U.S. Attorney Kevin J. O’Connor called it one of the most egregious instances of government fraud during his more than two years in office. The 39-year-old attorney was indicted on civil charges under the federal False Claims Act nearly two years ago. Federal prosecutors say that, between January 1999 and June 2001, Spayne was paid nearly $3.3 million by the U.S. Navy through its contracts with EB, much of it due to allegedly gross overbilling. Under the settlement agreement announced Jan. 31, Spayne did not admit liability. “This was a pretty large case, certainly beyond anything I’ve seen,” O’Connor said in an interview last week. His office, he noted, decided to settle with Spayne after weighing costs benefits, such as Spayne’s ability to reimburse the government, against the uncertainty of winning a judgment against him by going to trial. Spayne’s attorney, Richard Egbert of Boston, said it made financial sense for his client to settle the claims, as well. He said Spayne would have spent well in excess of the $1 million to defend himself in a civil trial. The settlement with O’Connor’s office does not affect Spayne’s ability to practice law nor would it implicate him in any criminal trial. “We wouldn’t rely on a civil settlement in a criminal case because of the higher standards of guilt” needed for a criminal conviction, O’Connor explained. PHYSICALLY IMPOSSIBLE? Egbert would not comment on the specific allegations against Spayne, but said criminal charges against his client have been stayed. An attorney familiar with the case said Spayne has melanoma, an often-fatal form of skin cancer. Egbert wouldn’t comment on his client’s personal health. O’Connor wouldn’t divulge the reasons for the stay. Egbert said he and the Internal Revenue Service are in discussions over Spayne’s tax liability for the years 1999 and 2000 when the government claims his income was under-reported. According to the civil claims against him, on Feb. 17, 2000, Spayne billed Electric Boat for 94.75 hours in a 24-hour period. “On that one day he supposedly reviewed 113 files, made and received 91 phone calls and wrote 72 letters,” according to the government’s March 15, 2004, complaint against Spayne. During the 1999 and 2000 calendar years, Spayne allegedly charged the company for more than 24 hours of work in a single day 135 times. During that same time period, the complaint contends, Spayne billed between 13 and 24 hours in a single day approximately 226 times. In 1999 as a whole, Spayne billed Electric Boat for 5,096 hours, which equates to approximately 17 hours a day, according to federal prosecutors, assuming Spayne worked six days a week and 50 weeks a year. In 2000, Spayne billed for 6,479 hours, or 22 hours a day, they alleged. By May 2001, Electric Boat’s workers’ compensation office became suspicious of Spayne’s workload and confronted him with its belief he was inflating his bills. According to the government’s complaint, “[a]fter that time, Spayne began to submit bills to EB that were less inflated.” The government determined that, from 1991 to 2001, Spayne inflated his billable hours by at least 6,908 hours. By its estimation, the overbillings equated to at least $1,243,440. Spayne’s alleged chicanery included billing for specific parts of an injured worker’s body instead of the whole person. For example, if a worker had eye, knee and arm injuries, Spayne would file a claim for each injured body part. In one case outlined by federal prosecutors, on April 15, 1999, Spayne opened three separate claim files for a worker’s injuries to his left knee, right knee, and hands and arms. “[Spayne] allegedly prepared three letters, one related to each body part … prepared three memos to the file … [and] billed 1 hour to each of the three claims for an initial intake conference … even though he did not spend three hours with the claimant,” they alleged. All told, Spayne is claimed to have billed 10.75 hours for the client on that one day while separately billing 48.75 additional hours for work done on other Electric Boat cases. Spayne was the only attorney in his law office, but employed several non-attorneys on staff, according to the government. He billed all his firm’s services, though, as if they had been performed by him at an hourly rate of $165 to $200 per hour. Of the $1.24 million collected in the settlement, $1 million will be paid to the Navy, which had reimbursed Electric Boat for workers’ compensation claims related to contract work done on its behalf. Approximately $240,000 will be paid to IRS as advance payment of Spayne’s alleged tax liability for the 1999 and 2000 tax years. Egbert said that money is being held in escrow with the IRS “to stop the meter running and for us to argue later on. The money had been seized anyhow.”

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