UPS has agreed to pay $25 million to resolve allegations by a whistleblower that it submitted false claims to the federal government in connection with delivery of Next Day Air overnight packages for more than a decade, the US Justice Department announced yesterday.
UPS denies the allegations and the settlement does not mean that the company accepts liability, a spokeswoman told US media.
The settlement resolves allegations that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages, the Justice Department stated.
In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS, who will receive $3.75 million.
“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “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.”
“This conduct affected numerous federal agencies,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia. “We place high importance on the integrity of companies that provide services to the government.”
UPS provides delivery services, including guaranteed next-day deliveries, to hundreds of federal agencies through contracts with the U.S. General Services Administration (GSA) and U.S. Transportation Command, which provides support to Department of Defense agencies.
