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Stericycle Settles for $28.5 million in Qui Tam Action; Healthcare Whistleblower to Collect $5.5 million

The Northern District of Illinois approved the $28.5 million final settlement of the action styled US ex rel. v. Stericycle, Inc., 1:08-cv-02390 (N.D. Ill) earlier this month. Stericycle, an international medical waste disposal company, was accused of artificially inflating its prices by 18% for its state and federal government customers, totaling to almost $12 million in overcharges. Plaintiff-relator Jennifer Perez will collect a $5.5 million relator’s share of the settlement.

Stericycle, headquartered in Lake Forest, Illinois, services both government and private customers. In the initial complaint, Plaintiff-relator Perez exposed Stericycle’s suspected overpricing scheme, whereby it purportedly withheld accurate pricing data from potential customers, and then added on ‘fuel and energy’ surcharges after contracts had been finalized. Fourteen states and the District of Columbia were damaged by Stericycle’s alleged price-inflation.

Perez served as a government customer-relations specialist for Stericycle from 2004 to 2008. She became suspicious of Stericycle’s billing practices in or around 2006 when she first noticed the periodic 18% increases that were charged to government accounts in advance of services rendered.

Although the government declined to proceed with the Plaintiff-relator’s False Claims investigation, Perez and counsel were undeterred in pursuing the action. During the course of the investigation, Perez and counsel reviewed thousands of Stericycle documents spanning over a ten-year period. As a result, Perez’s relator’s share reflects a larger portion of the total settlement. Typically, a whistleblower is entitled to an award between 15% and 30% of the total amount recovered as a result of the qui tam lawsuit.

Even though Stericycle’s alleged deception cost the government around $12 million, state and federal entities will recover not only these losses, but substantial additional penalties. Under qui tam law, the government is allowed to collect up to three times the alleged damages, plus additional civil damages.

Stericycle’s suspected pricing scheme is not unique. Healthcare fraud, including Medicare fraud, is one of the most common types of False Claims Act violations. Other examples of healthcare fraud cases include billing for services or supplies that were not provided, or the submission of improper Medicare and Medicaid claims as a result of aggressive off-label marketing of name brand pharmaceutical products.

© 2019 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

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