Illinois Settles False Claims Act Case Involving Medical Waste Handling

Medical Waste and Safe HandlingIn October 2015, Illinois Attorney General Lisa Madigan announced a financial settlement with Stericycle, Inc., a medical waste disposal company. The settlement totaled more than $26 million. The case resolution is in response to the Illinois-based company overcharging numerous government entities located in various states within the US without contractual authorization. The state-accepted settlement Results many of the violations the company made when overcharging millions of dollars to unsuspecting customers.

Civil action was initiated in 2008 by a whistleblower, who was a former Stericycle employee. The whistleblower filed a “qui tam” lawsuit in U.S. District Court under the Federal False Claims Act and numerous equivalent state statutes. As a part of the settlement terms, the state of Illinois will receive approximately $3 million of which $1.6 million will be distributed to nearly 350 local and state government entities in Illinois that received the company’s services and became victims of Stericycle’s fraudulent pricing increases.

Price Increase Violation

Many health departments, school districts, police departments, municipalities, nursing homes and colleges have received medical waste disposal services from Lake Forest-based Stericycle. The lawsuit document makes allegations that beginning in 2003, the company implemented an automated pricing increase plan without providing notice of the escalating charge to government customers. Stericycle’s price increase plan violated U.S. and State False Claims Acts.

The automated price increase plan purportedly related to energy and fuel surcharges. However, these increases did not accurately reflect the rising costs of energy and fuel during this time frame. The lawsuit alleges that the fraudulent price changes amounted to an approximately 18 percent price surcharge every nine months. This directly violates the contractual agreements the company may with the government entities. In Illinois, the increase robbed the government of already limited funds.

Company Denies Allegations

As a part of the settlement agreement, the medical waste handling company has denied all allegations made by the whistleblower. According to Stericycle, the case is being settled without the company admitting wrongdoing or fault. Both Illinois and Stericycle agreed to settle the lawsuit in an effort to avoid the uncertainty, delay and expense of continuing litigation.

The United States federal government, Illinois and additional states joined in the settlement including California, Delaware, Indiana, New Jersey, Nevada, Rhode Island, Tennessee, North Carolina and the Commonwealths of both Virginia and Massachusetts along with the District of Columbia. The settlement agreement between the parties finalizes the qui tam (whistleblower) lawsuit that was filed in U.S. District Court for Eastern District of Illinois.

Medical Waste Tracking Act

By enacting the Medical Waste Tracking Act in 1987, the U.S. Congress responded to the inflow of hazardous medical waste that was washing up on beaches along the eastern coastline. Under the act, companies doing business in the health-related industries are now required to remain in compliance with disposing and storing medical items and devices including biological materials and syringes. As a result, Stericycle and other companies in the private sector began offering medical waste handling services. The company remains the most diverse and largest medical waste transport company in the U.S.

Stericycle and its subsidiaries provide compliance and regulated services to the commercial and healthcare industries. As a part of its services, the company handles and processes specialized medical waste through disposal and storing solutions. It also provides hazardous waste management, clinical services, medical compliance and waste programs, pharmaceutical waste disposal, Bio Systems reusable sharps containers, integrated waste stream solutions and medical safety products.

The case was handled through the Illinois Attorney General’s Special Litigation Bureau, which was litigated by Assistant Gen. Attorney Harpreet Khera. The Special Litigation Bureau handles affirmative litigation and complex investigations especially cases that protect government resources from corruption, abuse, waste and fraud.

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