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HomeMy WebLinkAbout2017-05-03 Waste Management of Hawaii, Inc and The County of Hawaii, Reimbursement Agreementwe WASTE MANU1pEMEW / Andrew M. Kenefick Senior Legal Counsel, Western Group Admitted in Washington Direct (425) 825-2003 Fax (866) 863-7961 akenefick(]a wm com April 27, 2017 VIA OVERNIGHTMMIL Joseph P. Kamelamela, Corporation Counsel County of Hawaii 101 Aupuni Street, Suite 325 Hilo, HI 96720 RE: West Hawaii Sanitary Landfill Employee Fraud Investigation and Reimbursement to County Dear Mr. Kamelamela: 720 Fourth Avenue, Suite 400 Kirkland, WA 98033 (425)823-6164 Thank you for your assistance in reaching a final resolution of this matter. I am forwarding to You, routed through Larry Metter's office, the two attached originals of the Reimbursement Agreement. Please arrange for final execution of these documents and return an original to me at the above address. Again, thank you and the Department of Environmental Management for helping us work through this unfortunate situation. Sincerely, Andrew M. Kenefick Enclosures REIMBURSEMENT AGREEMENT This REIlVMURSEMENT AGREEMENT ("Agreement") is made and entered into between WASTE MANAGEMENT OF HAWAII, INC. ("WMH") and THE COUNTY OF HAWAII (the "County"). The parties shall be collectively referred to herein as the "Parties" and individually as a "Party", unless specifically identified otherwise. This Agreement shall be effective upon the date that all Parties have executed this Agreement (the "Effective Date"), as evidenced by the signatures below. RECITALS WHEREAS the County owns the West Hawaii Sanitary Landfill, also known as the Puuanahulu Landfill ("WHSL"); WHEREAS under the Landfill Construction, Operation and Closure Agreement dated April 21, 1993, including amendments, WMH performs certain work at WHSL, including cell construction and preparation, closure and post -closure maintenance, and environmental compliance; WHEREAS under a longstanding arrangement between the County and WMH, WMH hires temporary laborers to provide litter service at the WHSL, for which the County reimburses WMH for the cost of the labor, along with a surcharge; WHEREAS in early December 2014, WMH began an internal investigation of potential fraudulent activity by a longtime WMH employee (the "Employee"); WHEREAS as a result of WMH's internal investigation, the Employee was suspended on December 17, 2014, and terminated on December 26, 2014; WHEREAS on or about December 23, 2014, WMH notified the Department of Environmental Management at the County of the investigation, summarized its preliminary findings, and committed to reimbursing the County for any overpayments made by the County as a result of the Employee fraud; WHEREAS in January 2015, WMH hired outside legal counsel, Carlsmith Ball LLP, to investigate independently the activities of the Employee and report its findings to WMH, including the scope and duration of the Employee fraud and whether and to what extent the Employee fraud resulted in overcharges to the County; WHEREAS outside counsel's independent investigation found that the details of the Employee's fraud varied over time, and many factors may have contributed to that variation, including changes to WMH's or the County's temporary hiring needs, changes to WMH's procurement and invoicing processes, new or different supervision, new or different co- conspirators, and variations in the Employee's own remuneration desires; and furthermore, each payroll week represented a unique fraud, inasmuch as each payroll week involved different temporary workers, employed in different capacities and for a different number of hours, at various hourly wages, and due to the fact that the Employee inflated those hours and wages to differing degrees each week. Page 1 of 6 WHEREAS outside counsel's independent investigation found that, while the details of the Employee's fraud varied from week -to -week, the basic structure of the fraud consisted of: (a) the Employee submitting correct weekly timesheets reflecting actual hours worked by temporary laborers at WHSL to a temporary labor agency; (b) the agency then properly paying the laborers for their actual time worked; (c) the agency generating and transmitting to the Employee a con•ect invoice for the cost of the laborers; (d) the Employee generating a false invoice or invoices for the laborers that reflected inflated hours and/or wages for the laborers; (e) the Employee submitting the false invoices to WMH for payment, (f) WMH paying the agency based on the false invoices, and (g) the agency remitting to the Employee some or all of the overpayment; WHEREAS outside counsel's investigation determined that, as a result of the Employee's fraud, WMH unknowingly overcharged the County for some temporary labor and associated costs dating back to 2008, and possibly earlier; WHEREAS outside counsel's investigation has estimated the amount that WMH unknowingly overcharged the County was approximately $934,200 for the period 2010-2014 (the "2010-2014 Overpayment"); and between $414,000 and $445,900 for the period 2008- 2009 (the "2008-2009 Overpayment"); WHEREAS outside counsel's investigation determined that the Employee's fraud may have begun prior to 2008; however, outside counsel has not been able to determine the duration or amounts of overpayments; and WHEREAS WMH wishes to reimburse the County for overpayments for both the 2010- 2014 Overpayment and the 2008-2009 Overpayment, while the County wishes to reserve its rights with respect to overpayments (if any) prior to 2008; TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the Parties mutually agree, represent, and warrant as follows: 1. Purpose of Agreement. The purpose of this Agreement is reconcile and reimburse certain payments made under the Landfill Constnrction, Operation and Closure Agreement (April 21, 1993) by memorializing the Parties' agreement that WMH shall reimburse the County for any and all overpayments made by the County to WMH as a result of the Employee's fraud for the periods 2010-2014 and 2008-2009. With respect to the 2010-2014 Overpayment, the Parties wish to fully and finally resolve all potential disputes between the County and WMH in exchange for WMH's reimbursement herein. With respect to the 2008-2009 Overpayment, the Parties wish to resolve all potential disputes between the County and WMH in exchange for WMH's reimbursement payment herein; provided however that the Parties agree that the amount of the 2008-2009 Overpayment may be later increased or decreased, as set forth in Section 4 below. 2. Payment. Within TWENTY (20) days after the Effective Date, WMH shall make payment to the County via check or wire transfer in the amount of ONE MILLION THREE HUNDRED FORTY-EIGHT THOUSAND TWO HUNDRED DOLLARS ($1,348,200.00) (the "Payment"), which is comprised of: Page 2 of 6 2.1. $934,200 for repayment of the 2010-2014 Overpayment, and 2.2. $414,000 for repayment of the 2008-2009 Overpayment. 3. Release of Claims. The Parties understand that they are giving broad releases, and releasing claims of which they may not be aware. They have had a full and complete opportunity to investigate all potential claims, known and unknown, and enter into this Agreement knowingly, in return for the consideration set forth herein. The Parties understand that even if they later discover facts of which they were not aware at the time they entered this Agreement, they will not be able to set aside this Agreement or bring action or suit upon any claim released herein. 3.1. 2010-2014 Overnayment'Upon receipt of the Payment, the Parties fully, irrevocably, and forever waive, release, and discharge each other, and their managers, directors, officers, members, shareholders, representatives, agents, and employees, from any and all claims, debts, commissions, actions, causes of action, liability, demands, damages, obligations, and losses of whatever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, they may have against the other, that relate to or arise from any conduct or events related to the Employee's fraud as described in the Recitals or to the reimbursement of temporary labor costs at WHSL, that occurred during the years 2010 through 2014. 3.2. 2008-2009 Overpayment. Subject to Section 4 below, upon receipt of the Payment, the Parties fully, irrevocably, and forever waive, release, and discharge each other, and their managers, directors, officers, members, shareholders, representatives, agents, and employees, from any and all claims, debts, commissions, actions, causes of action, liability, demands, damages, obligations, and losses of whatever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, they may have against the other, that relate to or arise from any conduct or events related to the Employee's fraud as described in the Recitals or to the reimbursement of temporary labor costs at WHSL, that occurred during the years 2008 through 2009. 3.3. Pre -2008 Claims. Nothing in this Agreement releases or waives any claims or defenses relating to the Employee's fraud occurring prior to 2008, including any claims for overpayments made prior to 2008. 4. Limited Re -Opener of 2008-2009 Overpayment. The Parties agree and acknowledge that both Parties have used their reasonable best efforts to determine that amount of the overpayments made by the County and owed by WMH. While the Parties intend that the 2008-2009 Overpayment shall resolve the County's claim, the Parties agree that they shall adjust the 2008-2009 Overpayment, including WMH paying additional amounts or the County refunding amounts, if additional information demonstrates a difference of more than FIVE PERCENT (5%) between the 2008-2009 Overpayment and the actual amount of the overpayment resulting from the Employee's fraud. Such "additional information" means information obtained as the result of the investigation and/or prosecution of the Employee or information obtained from an investigation conducted by a governmental agency, including the County. 4.1. If, by the Re -Opener Deadline (as defined herein), either Party believes that there is a difference of more than 5% between the 2008-2009 Overpayment and the actual amount of the overpayment resulting from the Employee's fraud, that Party shall notify Page 3 of 6 the other Party and the two Parties shall negotiate in good faith to determine the amount of the adjustment. 4.2. If the Parties agree to the amount of the adjustment, the Party owing the amount of the adjustment shall promptly pay that amount to the other Party. 4.3. If the Parties are unable to agree to the amount of the adjustment, either Party may demand that the amount of the adjustment be resolved through final and binding arbitration before Judicial Arbitration and Mediation Services ("JAMS"), or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. § I et seq. Either Party may commence arbitration by filing a written demand for arbitration with JAMS, with a copy to the other Party. The arbitration will be conducted in accordance with the provisions of JAMS' Streamlined Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The arbitration shall be conducted at Hilo, Hawaii or in such locations as all the Parties may stipulate. The Parties will cooperate with JAMS and with one another in selecting an arbitrator from JAMS' panel of neutrals, and in scheduling the arbitration proceedings. The Parties covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs. 4.4. If either Party fails to provide the notice required under subsection 4.1 above by the Re -Opener Deadline, that Party's right to invoke this reopener shall expire. 4.5. For purposes of this Section, "Re -Opener Deadline" shall mean the date ONE (1) year after the occurrence of any one of the following: (a) The entry of a plea agreement by the Employee in connection with a federal or state prosecution of the Employee fraud described in the Recitals; or (b) The conviction or acquittal of the Employee in connection with a federal or state prosecution of the Employee fraud described in the Recitals; or (c) The receipt by the County of written confirmation from a representative of the Office of the United States Attorney for the District of Hawaii that it has terminated its criminal investigation of the Employee fraud. 5. Miscellaneous. 5.1. No Admission of Liability. The Parties agree that this Agreement and the covenants made hereunder are not to be deemed or construed as an admission of any breach, fault, or liability of any kind whatsoever, but are to be construed strictly as a compromise of claims. 5.2. Attorneys' Fees and Costs for Agreement. Each Party agrees to bear its own attorneys' fees, costs, and other expenses regarding the negotiation and drafting of this Agreement. 5.3. Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the Parties and their respective successors and assigns. 5.4. Entire Agreement: Amendment. This Agreement constitutes the entire agreement among the Parties concerning the subject matter hereof and supersedes all previous correspondence, communications, agreements and understandings, whether oral Page 4 of 6 or written among the Parties. This Agreement may not be modified, in whole or in part, except upon unanimous approval of the Parties and by a writing signed by all the Parties. 5.5. No Waiver. Any failure of the Parties to enforce any of the provisions of this Agreement or to require at any time performance by the other Party of any of the provisions hereof during the pendency of this Agreement shall in no way affect the validity of this Agreement, or any part hereof, and shall not be deemed a waiver of the right of the Parties thereafter to enforce any and each such provision. 5.6. Further Assurances. The Parties agree to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, in order to give full effect to this Agreement and to carry out the intent of this Agreement. 5.7. Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability shall not affect any other provision in this Agreement and this Agreement shall be construed as if the invalid illegal, or unenforceable provision had never been contained in it. 5.8. Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, then this Agreement must be construed as if drafted jointly by the Parties, with no presumption or burden of proof arising that favors or disfavors any Party because it authored any of the provisions of this Agreement. 5.9. Headings. The Headings used in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement nor the intent of any provision thereof. 5.10. Governing Law. This Agreement, and all amendments or supplements thereto, shall be governed by and construed in accordance with the laws of the State of Hawaii. 5.11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties enter into this Agreement. Each person signing this Agreement represents and warrants that he or she has been duly authorized to enter into this Agreement by the Party on whose behalf it is indicated that the person is signing. Page 5 of 6 WASTE MANAGEMENT OF HAWAII, INC. By: Name: Title: Date: APPROVED AS TO FORM: COUNTY OF HAWAII By: ,. Name: arry Title: Mayor Date: -MAY 9 RECOMMENDED APPROVAL: By: Name: Wi liam rtrharctri Title: Director, Department of Environmental Manaeement APPROVED AS TO FORM: By: �r� ICas.rlvi shy. Name: Andrew M. Kenefrck Name: _Joseph . Camelamela Title: Senior Legal Counsel Title: Corporation Counsel Page 6 of 6