NATIONAL CONSULTING COMPANY TO PAY $11 MILLION RESOLVING FALSE CLAIMS ALLEGATIONS

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, May 31, 2016

Deloitte Consulting LLP Agrees to Pay $11 Million for Alleged False Claims Related to General Services Administration Contract

The Department of Justice announced today that Deloitte Consulting LLP (Deloitte) has agreed to pay $11.38 million to resolve allegations under the False Claims Act that it submitted false claims under a General Services Administration (GSA) contract.  Deloitte is a nationwide consulting company headquartered in New York City.

“Contractors are expected to deal fairly with federal agencies when receiving taxpayer funds,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As this settlement demonstrates, we will take action against those who knowingly fail to live up to the terms of their government contracts.”  

In 2000, GSA awarded Deloitte a contract for the provision of information technology services.  The contract required Deloitte to reduce the prices it charged the government if it offered lower prices to specific commercial customers during the course of the contract.  This settlement resolves allegations that between 2006 and 2012, Deloitte failed to comply with the price reductions clause in its contract, resulting in government customers paying more for Deloitte’s services than comparable commercial customers.

“American taxpayers deserve fair deals and prices from GSA contractors,” said GSA Inspector General Carol Fortine Ochoa.  “I appreciate the hard work and dedication that led to this significant recovery.”

This case was handled by the Civil Division’s Commercial Litigation Branch and the GSA Office of Inspector General.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

MILITARY CONTRACTOR SETTLES ALLEGED VIOLATIONS OF FALSE CLAIMS ACT

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, July 2, 2013 
CyTerra Corporation Agrees to Pay $1.9 Million to Resolve False Claims Act Allegations 

CyTerra Corporation has agreed to pay the federal government $1.9 million to resolve civil liability arising from its failure to provide the U. S. Department of the Army with accurate, complete and current cost or pricing data for its sales of mine detectors, the Justice Department announced today. CyTerra, headquartered in Waltham, Mass., manufactures equipment, including portable mine detectors, used by the U. S. military.

“The Department of Justice will hold accountable those who undermine the integrity of the public contract process in pursuit of financial gain,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the U. S. Department of Justice. “Those who wish to do business with the government are expected to do so fairly, and those who don’t will face the consequences.”

In 2003, the Department of the Army awarded CyTerra a contract for the production and delivery of AN/PSS-14 hand-held mine detection units. The contract was modified several times to provide for the production and delivery of additional mine detection units. The government contended that, in connection with the negotiations concerning three of these contract modifications, CyTerra knowingly failed to provide the Army with the most recent cost or pricing data on the number of labor hours needed to produce a mine detector. Under the Truth in Negotiations Act, CyTerra was required to provide cost or pricing data that was “accurate, complete and current.” The government alleged that if the Army had received such information, it would have negotiated a lower price.
“Contractors who negotiate with the government must be scrupulous in their dealings with the government,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “Government contractors should be on notice that the requirements of the Truth in Negotiations and False Claims Acts will be enforced.”

The civil settlement resolves a lawsuit pending in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the U. S. and share in any recovery. The action was filed by Kevin Bartczak and Keith Aldrich, two former CyTerra executives. As part of today’s resolution, Bartczak and Aldrich will share $361,000 from the civil recovery.

The case is being handled by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Commercial Litigation Branch, with investigative assistance from the Defense Criminal Investigative Service.
“The Defense Criminal Investigative Service (DCIS) is committed to working with its partner agencies, such as the U.S. Department of Justice, the Naval Criminal Investigative Service and the Army Criminal Investigation Command, to ensure the integrity of the Defense Department’s procurement process,” said Leigh-Alistair Barzey, Resident Agent-in-Charge of the DCIS Boston Resident Agency. “This settlement agreement reflects that commitment and is a successful resolution of this investigation, which could not have occurred without the direction of the Department of Justice and the assistance of the Defense Contract Audit Agency’s Investigations Support Division.”

COMPANY TO PAY MORE THAN $5.6 MILLION TO RESOLVE FALSE CLAIMS ALLEGATIONS

FROM: U.S. DEPARTMENT OF JUSTICE
Friday, March 29, 2013
CDW-Government to Pay U.S. $5,663,902 to Resolve False Claims Act Allegations

CDW-Government LLC (CDW-G) has agreed to pay $5.66 million to resolve allegations that it submitted false claims in connection with a U.S. General Services Administration (GSA) contract, the Justice Department announced today. CDW-G is a wholly-owned subsidiary of Illinois-based CDW Corporation and a reseller of information technology, equipment, services, office supplies and related products. The settlement resolves allegations that, during the period 1999 to 2011, CDW-G improperly charged government purchasers for shipping, sold products to the United States that were manufactured in China and other countries that are prohibited by the Trade Agreements Act, and underreported sales in order to avoid paying GSA its "Industrial Funding Fee," a fee based on total contract sales that is designed to cover GSA’s costs of contract administration.

"Protecting the federal procurement process is a top priority for the Department of Justice," said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. "Contractors who abuse that process and undermine American trade interests will be held accountable for their actions."

"My office will not tolerate any abuse of the contracting process with the United States," said Stephen R. Wigginton, U.S. Attorney for the Southern District of Illinois. "My warning is both simple and certain: If you knowingly overcharge the United States, we will pursue all remedies available to us and we will recover the government’s losses."

The allegations arose from a lawsuit filed in a federal court in East Saint Louis, Ill., under the qui tam or whistleblower provisions of the False Claims Act. Those provisions allow private individuals known as "relators" to sue on behalf of the United States and to share in the proceeds of any settlement or judgment that may result. The relator in this case, former CDW-G sales representative Joe Liotine, will receive $1,336,098 of the total recovery as a statutory award. The relator may also be entitled to receive additional amounts from the defendant for attorneys’ fees and costs.

The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is captioned U.S. ex rel. Joe Liotine, vs. CDW-Government, Inc., 05-cv-33-DRH-DGW. The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Southern District of Illinois and the GSA Office of Inspector General.

INFRASTRUCTURE CONSTRUCTION COMPANY SETTLES FALSE CLAIMS ALLEGATIONS

FROM: U.S. DEPARTMENT OF JUSTICE
Friday, February 8, 2013
California-Based Granite Construction Company to Pay U.S. $367,500 to Resolve False Claims Allegations

Granite Construction Company, a California-based construction company specializing in roads, tunnels, bridges, airports and other infrastructure-related projects, reached a settlement with the United States following an investigation of alleged false claims in connection with federal construction projects across the country, the Justice Department announced today. Granite has agreed to pay the United States $367,500.

The settlement resolves claims that Granite overcharged the government on certain federal construction projects funded by the Department of Transportation (DOT) and the Army Corps of Engineers between 2006 and 2008. Specifically, in certain instances, Granite sought price increases in the form of change orders and requests for equitable adjustment which were inflated because the general liability and workman’s compensation insurance rates used to support the adjustments included added amounts or "cushions" that were not actually incurred by the company and therefore should not have been charged to the federal government. Granite disclosed the potential overcharges to the Justice Department.

"Federal contractors will be held accountable for their billing practices," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division. "This settlement is an example of the department’s commitment to ensuring that contractors deal squarely and honestly with the government at all times."

"To prevent and detect potential violations of law, we encourage federal contractors to apply consistent oversight to their operations throughout all phases of contracting," said DOT Office of Inspector General Special Agent in Charge Hank Smedley. "This settlement is an example of how we work with our law enforcement colleagues to protect taxpayer dollars."

The investigation and settlement was the result of a coordinated effort by the Civil Division of the Department of Justice and the Department of Transportation Office of Inspector General. The claims settled by this agreement are allegations only, and there has been no determination of liability.

W.W. GRAINGER SETTLES FALSE CLAIMS ALLEGATIONS CASE WITH U.S. JUSTICE DEPARTMENT FOR $70 MILLION

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, December 26, 2012

Illinois-based Hardware Distributor W.W. Grainger Pays US $70 Million to Resolve False Claims Act Allegations

W.W. Grainger Inc. has agreed to pay the United States $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS), the Department of Justice announced today. Grainger is a national hardware distributor headquartered in Lake Forest, Illinois.

Grainger entered into a contract to sell hardware products and other supplies to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.

Today’s settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.

In addition, today’s settlement resolves allegations that Grainger failed to meet its contractual obligations to provide "most-favored customer" pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s "most-favored customer" by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.

"Misrepresentations during contract negotiations undermine the integrity of the government procurement process," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled."

"The substantial payment by Grainger reflects the Justice Department’s focused and productive work in the economic interests of our citizen constituents," commented United States Attorney James L. Santelle of the Eastern District of Wisconsin. "This settlement shows that we are committed to ensuring that false claims are investigated fully and pursued effectively so that government monies are used properly and the integrity of our contracting system is upheld."

"This case is another demonstration of the value of the work performed by Inspectors General ," said GSA Inspector General Brian D. Miller. "Our auditors and agents worked tirelessly to reach this critical settlement."

"The U.S. Postal Service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses. We appreciate the partnership of the Civil Divisions of the Department of Justice and the United States Attorney’s Office for their support in this case," said Joanne Yarbrough, Special Agent-in-Charge of the OIG’s Major Fraud Investigations Division.

This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of Wisconsin; the GSA Office of Inspector General; and the USPS Office of Inspector General and Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.

BLACKSTONE MEDICAL PAYS $30 MILLION TO SETTLE FALSE CLAIMS ACT ALLEGATIONS

FROM: U.S. DEPARTMENT OF JUSTICE

Friday, November 2, 2012
Orthofix Subsidiary, Blackstone Medical, Pays U.S. $30 Million to Settle False Claims Act Allegations
Allegedly Paid Kickbacks to Doctors to Induce Use of Company’s Products

Orthofix International NV, has agreed to pay the United States $30 million to settle allegations that an Orthofix subsidiary, Blackstone Medical Inc., paid illegal kickbacks to physicians in order to induce use of the company’s products, the Justice Department announced today. Orthofix, which manufactures spinal implants and other spinal surgery products, is a publicly traded company headquartered in Curacao.

The civil settlement resolves allegations that Blackstone paid kickbacks to spinal surgeons. These alleged kickbacks took a number of forms, including sham consulting agreements, sham royalty arrangements, sham research grants, travel and entertainment.

"Kickbacks to physicians are incompatible with a properly functioning health care system," said Stuart F. Delery, the Acting Assistant Attorney General for the Department’s Civil Division. "They can corrupt physicians’ medical judgment and cause misallocation of vital health care resources. Today’s settlement reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry."

"This settlement demonstrates the government’s continued resolve to ensure that patients receive, and the government pays for, health care that is based solely on sound medical judgment, not compromised by kickbacks," said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. "We believe that this is a just and meaningful resolution that is in the best interests of the citizens of the Commonwealth and taxpayers across the nation."

"To those contemplating taking advantage of Medicare for their own gain, today’s settlement sends a loud, clear message," said Susan Waddell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General New England region. "Law enforcement will work aggressively to eliminate efforts to abuse vital taxpayer-funded health care programs."

"Our men and women in uniform and their beneficiaries rely on their healthcare providers to perform their jobs without bias and make decisions in the best interest of their patients," said Kathryn Feeney, Resident Agent in Charge for the Defense Criminal Investigative Service, New Haven Resident Agency. "Kickbacks, like those alleged here, undermine the TRICARE Military Health System . A settlement like this helps maintain the integrity of an important program our armed services depend on."

"Blackstone Medical, Inc. now knows the FBI and our law enforcement partners are committed to investigating and uncovering healthcare fraud in all its forms, particularly schemes like the kickbacks Blackstone perpetrated to obtain profits at the expense of taxpayers," said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division.

As part of the settlement, Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that alleged in this matter.

The allegations resolved by today’s settlement were initially alleged in a whistleblower suit filed under the False Claims Act, which authorizes private citizens to bring suit on behalf of the government for false claims for government funds, and share in any recovery. The whistleblower in this case, Susan Hutcheson, will receive $8 million as her share of the settlement amount.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $9.5 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.2 billion.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, Office of Inspector General of the Department of Health and Human Services, the FBI and the Defense Criminal Investigative Service of the Department of Defense. The claims settled by this agreement are allegations only, and there has been no determination of liability