UPS to pay $25 Million to Settle Claims of Concealing Late Deliveries
The Department of Justice announced that UPS has agreed to pay $25 million to resolve allegations that it submitted false claims regarding its Next Day Air overnight packages sent to the federal government over a 10-year period.
“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”
“This conduct affected numerous federal agencies,” added U.S. Attorney Dana J. Boente of the Eastern District of Virginia. “We place high importance on the integrity of companies that provide services to the government. Combating all manners of fraud on the government is a high priority in the Eastern District of Virginia.”
Government contracts with UPS include guaranteed package delivery times, but between 2004 and 2014, the government alleged UPS concealed its failure to meet those guaranteed times in order to prevent the government from requesting refunds for late delivery. Those methods include allegedly recording inaccurate delivery times to make it appear they were on time and applying inapplicable codes to excuse late deliver, such as "security delay," "customer not in" or "business closed."
While the claims are resolved, they remain allegations, as no livability has been determined.
"UPS values its relationships with all of its customers and continues to be a valued supplier in good standing with federal and state governments," Rosenberg said in a statement to Reuters.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. Robert K. Fulk, a former employee of UPS, filed the civil lawsuit in the Eastern District of Virginia. He will receive $3.75 million.
The federal government, along with 19 states, the District of Columbia and two cities were part of the lawsuit, according to Reuters. In addition to the $25 million settlement with the federal government, UPS will pay the state of New Jersey $740,000, according to USA Today. Litigation continues between UPS and the remaining jurisdictions.