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Union Welfare Fund Agrees to Settle False Claims Act Lawsuit For $4.8 Million

The United States Attorney announced a settlement with the District Council 1707, Local 95 Head Start Employees Welfare Fund (“Fund”) regarding allegations that the Fund violated the False Claims Act by overcharging the New York City Administration for Children’s Services (“ACS”), a Head Start grantee, for hospital insurance premiums that the Fund paid.

The Head Start program provides grants to public and private agencies that administer child development programs that serve economically disadvantaged children. The Fund administers the hospitalization insurance provided to the individuals who carry out the Head Start programs. The Fund submits invoices to ACS for reimbursement of the insurance premiums which are then reimbursed by ACS using Head Start grant money.

In February 2011, the relator, Sanjay Shah, initiated a whistleblower complaint under the qui tam provisions of the False Claims Act against Local 95, DC 1707-AFSCME, AFL-CIO (“Union”), the union representing the employees carrying out the Head Start program. The Fund was later added as an additional defendant.

The whistleblower’s complaint alleged that the Union submitted false claims to the ACS for payment of funds pursuant to the Head Start grant. It was further alleged that the Fund submitted false claims to ACS for reimbursement of higher insurance premiums than the Fund actually paid.

As part of the settlement, the Fund admitted to submitting claims to ACS for reimbursement of insurance premiums for an amount approximately $3 million more than the Fund actually paid. The Fund has agreed to pay the United States approximately $4.8 million to settle the False Claims Act allegations. The whistleblower will receive a share of the settlement proceeds as his reward.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.