Office Depot Agrees to Pay $475,000 to Settle False Claims Act Charge

The majority of U.S. states maintain a legislative tool for combatting fraud similar to the federal False Claims Act. State False Claims Acts may be nearly identical to the federal version, or they may contain more restrictive language. In New York, the state False Claims Act was recently pivotal in a settlement between the Attorney General’s office and office supply retailer Office Depot, resulting in a $475,000 refund of taxpayer dollars.

Details of Case

According to the allegations, Office Depot has historically maintained an exclusive contract with hundreds of state agencies and departments for the supply of much-needed office products. Not only was Office Depot responsible for supplying goods to government agencies, but it also held contracts with the Department of Corrections, several fire departments, and public schools.

The contract with New York, which commenced in 2008, contained language requiring Office Depot to offer the state an identical rate for services and goods that it offered the federal government – another organization with which it maintained a steady contract for supplies.

The complaint against Office Depot alleges that for a period spanning several years, the retailer did not have adequate controls in place to ensure it was meeting its promise to offer prices identical or less than those offered to the federal government. As a result, Office Depot is alleged to have overcharged over 500 state entities by hundreds of thousands of dollars.

Pursuant to the settlement agreement, Office Depot has agreed to issue a refund check for 100 percent of the overcharged amounts. In addition, the State of New York has decided to forgo renewing the contract for supplies with the company as of the end of 2013.

Attorney General Eric Schneiderman lauded the efforts of his office in uncovering this type of fraud. His office further remarked:

“By failing to honor their contract, Office Depot profited at the expense of New York taxpayers, local governments and state agencies…. At a time when municipalities across the state are struggling to meet tight budgets and fund critical services, my office will do everything in its power to ensure vendors honor their commitment to conduct fair and honest business with our communities.”

New York’s False Claims Act

The New York False Claims Act closely mimics the provisions of the federal version. Much like the federal FCA, defendants facing liability under the recently-fortified act may face triple damages for each violation. Moreover, the Act allows for an imposition of a penalty amounting to between $6,000 and $12,000 per violation.

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