United Parcel Service (UPS) has agreed to pay $4.2 million to fourteen states, as well as the District of Columbia, New York City, and Chicago. This settlement resolves allegations that the major package delivery company regularly falsified shipment records, essentially charging the government for faster shipping than it delivered.
Ex-UPS Employee Robert Fulk’s Lawsuit Spotlights More UPS Government Contract Chicanery
The case was initiated by former UPS employee Robert Fulk under the whistleblower provisions of the federal False Claims Act, as well as the false claims laws in each state and city involved in the settlement. This settlement provides further resolution to an ongoing case between the government and UPS. In May 2015, UPS settled with the federal government and the state of New Jersey for more than $25 million over similar allegations, also stemming from Fulk’s whistleblowing.
The allegations against UPS include the accusation that they deliberately submitted false claims to make it appear as though overnight packages being delivered to city, state, and federal offices were delivered on time when they in fact were not. UPS employees allegedly entered false delivery times into their system when delivering packages to government offices, in order to fraudulently bill the government for expensive overnight delivery fees.
False Claims Allegations: Phony Coding, Sham Delivery Times…Contract Fraud
In addition, some UPS employees allegedly applied incorrect codes in their system, excusing late packages on the basis of weather events when no such events had occurred. Similarly, some UPS employees are accused of entering codes for “business closed” when this was not the case in order to excuse late deliveries. This was allegedly done in order to prevent government employees from being able to receive refunds for expensive overnight delivery fees.
According to the allegations, these fraudulent practices were systematic and took place over a ten year period from 2004 until 2014. Since this case stemmed from Fulk’s suit under the False Claims Act, which allows private citizens to file suit on behalf of the government and then share a percentage of the government’s financial recovery, Fulk should receive around 15% of the settlement. Fulk was already awarded approximately $3.75 million of the May 2015 federal settlement. In that case, Fulk claimed he expressed his concerns to management about the fraudulent shipment practices while still employed by UPS, but his concerns were brushed aside, leading to him leaving his job at the company.
NY Assistant AG Eric Schneiderman says UPS Profits Improper on NY State False Claims
A multi-jurisdiction coalition led by the New York Assistant Attorney General’s office handled the negotiations with UPS leading to the $4.2 million dollar settlement. According to New York Attorney General Eric Schneiderman, “UPS improperly profited from charging New York state government entities – and ultimately our taxpayers – when its employees failed to meet its guaranteed delivery times for overnight deliveries.”
Regarding the May 2015 case, Principal Deputy Assistant General Benjamin C. Mizer of the Justice Department’s Civil Division said “Protecting the federal procurement process from false claims is central to the mission of the Department of Justice. 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.”
"The United States should get what it pays for, nothing less," said Robert Erickson, acting inspector general of the General Services Administration.