A Middletown-based energy information company has reached a civil settlement agreement for $50,000 with the federal government over allegations they fraudulently billed the U.S. Department of Energy.

NXEGEN, a privately held energy service (ESCO) founded in 1998, provides real-time energy consumption information and energy efficiency solutions for its commercial, industrial, governmental, and institutional customers.

According to the U.S. Attorney’s Office in Connecticut, in September 2006, the U.S. Department of Energy awarded a one-year, $1.8 million cooperative agreement to NXEGEN that required 50/50 cost sharing of $900,000 each by the company and the U.S. Department of Energy.

The cooperative agreement was later amended to extend the performance period from September 1, 2008 through September 30, 2009, and an additional $1.876 million was added to the agreement, with NXEGEN and the U.S. Department of Energy each providing an additional $938,000 as their 50/50 cost shares.

The total payment by the U.S. Department of Energy to NXEGEN pursuant to the entire term of the cooperative agreement was $1.838 million.

According to a statement from Connecticut’s top federal prosecutor, U.S. Attorney David B. Fein, certain unallowable items were listed in invoices that NXEGEN submitted to the government for payment pursuant to the cooperative agreement.

For instance, the U.S. Department of Energy challenged equipment cost charges for the retrofitting of lighting fixtures in buildings equipped with NXEGEN’s energy data monitoring system as beyond the scope of work permitted by the cooperative agreement.

Such improper billing, according to Fein, is a violation of the False Claims Act and the common law. The False Claims Act provides for up to treble damages and penalties of $5,500 to $11,000 per false claim submitted to the government.

In order to resolve the allegations, NXEGEN agreed to pay $50,000. In entering into the settlement, NXEGEN denied any liability, and the agreement indicates that they settled the case in order to “avoid the delay, uncertainty, and expense of litigation.”

In addition to the monetary settlement, NXEGEN has agreed to create and implement a government contract compliance program that is administratively acceptable to the U.S. Department of Energy. The company will, for example, designate an in-house ethics program director who will provide employees with U.S. Department of Energy-approved training regarding federal laws and regulations related to federal funding.

NXEGEN also has agreed to establish written policies and procedures that will facilitate the company’s recording and tracking of accounting costs related to federal contracts and financial assistance awards or agreements. The company also has agreed to voluntarily refrain from participating in federal financial assistance opportunities for a nine-month period.

The investigation of this matter was conducted by the U.S. Department of Energy’s Office of the Inspector General, with auditing assistance from the Defense Contract Audit Agency. In addition, the Office of Chief Counsel at the U.S. Department of Energy’s National Energy Technology Laboratory was involved in the settlement negotiations and in the review of NXEGEN’s administrative compliance program.

The matter was handled within the U.S. Attorney’s Office in Connecticut by Assistant U.S. Attorney William A. Collier and Auditor Susan N. Spiegel.•