UPS Settles False Claims Allegations for $25 Million

The United Parcel Service recently settled allegations of false delivery charges to government agencies for $20 million.
Image source: Wikimedia Commons

The Department of Justice issued a groundbreaking press release involving a recent settlement with United Parcel Service, the national logistics company. The May 19, 2015, press release details several allegations involving false billing and invoicing for delivery services.

While UPS is primarily known for its on-ground delivery system, the False Claims Act allegations against the company involved next-day air services to dozens of federal agencies across the United States. The case was brought to light by a courageous whistleblower under the False Claims Act’s qui tam provisions. The former UPS employee is set to receive $3.75 million as a reward for her willingness to come forward with the information, which likely saved the government millions of additional dollars in wasted taxpayer resources.

UPS delivers settlement & corporate integrity agreement to DOJ

According to the allegations raised by the Department of Justice, UPS engaged in a decade-long fraudulent scheme essentially designed to prevent federal agencies from seeking refunds for late packages scheduled to be delivered on next-day overnight air. As background, UPS guarantees private customers certain delivery times based on the customer’s choice at the time of purchase. If the customer elects next-day air service (for an increased rate), UPS guarantees the delivery of that package on the next business day. However, if the package is not delivered by the stated time – the customer is entitled to a refund. Additionally, when any private company opts to enter into a service contract with the government, it must promise to offer the government equal or better rates for service than those offered to the private consumer.

Here, for a period spanning from 2004 through 2014, the package delivery giant is alleged to have unlawfully covered up its delivery failures to federal agencies and employees. More specifically, the allegations reveal that UPS charged the government for overnight delivery rates, failed to deliver on time, and devised schemes to hide these late deliveries from the government agency employees tasked with managing and auditing the contracts.

According to the details of the press release, UPS fraudulently doctored its delivery times on government packages to make it appear that those parcels were delivered in a timely manner. Moreover, if a package was obviously late, it implemented fraudulent, non-existent, “exception codes” to excuse the delay and avoid paying a refund. These exception codes included excuses such as “security delay,” “customer not in,” or “business closed.”

The majority of false claims allegations centered on deliveries to the Department of Transportation and the Department of Defense. However, hundreds of agencies and sub-agencies were implemented in the matter. In a to-the-point comment by the General Services Agency, “The United States should get what it pays for, nothing less.”

Contact a False Claims Act attorney today

If you are aware of fraudulent billing practices at your place of employment or would like to speak with a reputable whistleblower attorney about your awareness of fraudulent conduct, please contact Berger Montague today.

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By | 2018-03-26T09:36:53+00:00 May 26th, 2015|False Claims Act Legal News|