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UPS Agrees to Settle False Claims Act Lawsuit

According to the Department of Justice, United Parcel Service, Inc. (“UPS”) has agreed to settle allegations that it submitted false claims to the United States in connection with contracts to deliver packages for next day delivery.  The Justice Department alleged that UPS knowingly concealed that it had not complied with its delivery guarantees in violation of the False Claims Act.

In 2011, a former UPS employee, Robert Fulk, filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act in the U.S. District Court for the Eastern District of Virginia.  The allegations in the whistleblower’s complaint related to hundreds of contracts UPS had with the U.S. General Services Administration and the U.S. Transportation Command to provide delivery services to federal agencies.  The contracts required guaranteed delivery by UPS before specific times the next day.  The whistleblower alleged that when UPS didn’t meet the delivery deadline by the specified time, it falsified delivery documentation to make it appear as though it had met the delivery deadline.  Under the contracts, federal agencies would have been eligible to request a refund for the late delivery of packages. By falsifying the documents, the government contended that UPS deprived the federal government of those refunds.

In the complaint, the whistleblower specifically alleged that, from 2004 to 2014, UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time when in fact, they were not.  In addition, the whistleblower alleged that UPS applied exception codes to excuse late deliveries such as “security delay,” “customer not in,” or “business closed” when UPS knew those exception codes did not apply, and provided incorrect performance data under the federal contracts for delivery services.

UPS has agreed to pay $25 million to the federal government, and $740,000 to the state of New Jersey to settle the claims.  According to the Justice Department, the case remains pending as to the claims asserted by California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New Hampshire, New Mexico, New York, North Carolina, Rhode Island, Tennessee, Chicago, New York City, and Washington, D.C.

The whistleblower, Robert Fulk, will receive approximately $3.75 million of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.