Stericycle, Inc., one of the nation’s largest medical waste disposal companies, will pay a $2.4-million settlement, Attorney General Eric T. Schneiderman announced Monday.
This is as a result of improperly overcharging nearly 1,000 New York government entities, including police and fire departments, rescue squads, schools, jails, and hospitals all over the state. Since 2003, Stericycle implemented a plan to charge automated price increases (APIs) without giving any notice to these customers and in violation of the contract terms.
As a result of the Attorney General’s settlement, every affected government entity will receive a check from Stericycle covering 100 percent of the overcharged amount, over $820,000 in all. In addition, under the agreement, Stericycle will permanently discontinue APIs to the New York Government Customers covered by the settlement and provide notice and opportunity to opt out before any future rate increases of any kind.
“Stericycle improperly profited by overcharging New York taxpayers,” said Attorney General Schneiderman. “In these times of harsh budget cuts to education, public health, and public safety, local governments and agencies need every available dollar and we will hold accountable corporations like Stericycle that use cynical schemes to rip off New York taxpayers.”
A whistleblower complaint filed in Federal District Court in Chicago by Jennifer Perez, a former Stericycle employee, and unsealed Monday alleges that Stericycle fraudulently overcharged government customers across the United States with its API scheme.
The Attorney General’s investigation of the allegations in the complaint found that Stericycle had programmed its billing system to increase by 18%, an amount designed to go undetected by customers.
The Attorney General’s investigation found the sole reason for the APIs was to increase revenue and avoid detection by these customers. But when Stericycle customers would complain of rate increases, Stericycle employees were instructed to state that Stericycle had incurred actual increased costs due to, for example, new strict environmental regulations.
The investigation leading to this settlement was conducted by the Taxpayer Protection Bureau, established in 2011 to combat the fraud and abuse of taxpayer dollars; the case was brought under and investigated pursuant to the New York False Claims Act.
As a state senator, Schneiderman authored amendments to strengthen the False Claims Act. These enhancements, known as the Fraud Enforcement and Recovery Act, allow the state to collect triple damages and between $6,000 and $12,000 per violation from corporations or people who defraud the government, or violate their obligations to pay government entities.
Pursuant to the New York False Claims Act, the whistleblower receives a portion of the recovery. The False Claims Act incentivizes whistleblowers like Ms. Perez to bring these fraud cases, yet, because of its triple damages and penalties provisions, the whistleblower portion does not impact the recovery of actual damages.