United Parcel Service (UPS) has agreed to pay $25 million to the federal government to resolve allegations that the company submitted false claims to the government in order to hide its late delivery of overnight packages.
The civil settlement resolves claims filed under the whistleblower provisions of the False Claims Act, which allows private citizens to file suit on behalf of the United States government and to share in the government’s financial recovery.
Whistleblower Robert Fulk Says UPS Management Ignored His Report – Files Whistleblower Lawsuit
The whistleblower lawsuit against UPS was brought by Robert K. Fulk, a former UPS employee, who for his efforts will get 15 percent of the settlement or $3.75 million. Reuters quoted Fulk’s lawyer as saying her client was brushed off when he questioned his manager about the false claims. Fulk left UPS before filing his lawsuit.
Since 2009, the U.S. Department of Justice has recovered $23 billion under the False Claims Act, with $15 billion of that being from fraud perpetrated against federal health care programs.
The Atlanta-based UPS, with package operations revenue of $49 billion, provides contracted delivery service to hundreds of federal agencies in which the company guarantees the delivery of packages by specified times the next day.
Suit Alleged UPS Concealed Failure to Comply with Govt Contract
The settlement resolves allegations that for ten years, from 2004 to 2014, UPS concealed its failure to comply with its delivery guarantees -- subterfuge that prevented the federal government from seeking refunds for packages that UPS delivered late as part of its Next Day Air service.
Specifically, the federal government alleged that UPS knowingly recorded inaccurate delivery times on packages so as to make it appear that they were delivered on time, as well as using so-called exception codes -- such as “security delay,” “customer not in” or “business closed” -- when it was not actually the case. The government further alleged that UPS provided inaccurate on-time performance reports.
In a press release, Robert C. Erickson, the Acting Inspector General of the U.S. General Services Administration, used few words to express his sentiment about the case against UPS. “The United States should get what it pays for, nothing less,” he said.