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UPS to Shell Out $4M in Settlement Deal

UPS to Shell Out $4M in Settlement Deal

UPS, the largest package delivery business in the world, has agreed to pay out over $4 million as part of a settlement deal due to allegations that employees of the company made false claims related to package deliveries that led to thousands of local and state government agencies being overcharged. These actions prevented UPS from paying out millions in refunds to the agencies in question. The period in question covers ten years from 2004 to 2014. The settlement covers accusations by tens of thousands of government agencies in New York, California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, New Mexico, North Carolina, Tennessee, and Virginia, and the three cities – Chicago, New York City and Washington, D.C..

The charges were against specific UPS employees who delivered packages sent by government workers, and then recorded inaccurate delivery times on what were supposed to be next-day deliveries, when in all actually they took longer that what was guaranteed. They also made false claims that shippers had requested later delivery times when they had in fact not.

In addition, the employees were accused of assigning “exception codes” to excuse these late packages that were either inapplicable or inappropriate. One such code used incorrectly were an “adverse weather” event codes that were applied when it was sunny and clear. Because these codes were used, the shipping customers were not eligible to file claims and get their delivery costs refunded under contract terms when their packaged arrive after the committed time.

Attorney General Schneiderman’s office oversaw the investigation conducted by the Taxpayer Protection Bureau, which Schneiderman created in 2011 to protect taxpayer’s money from fraud and abuse. “UPS improperly profited from charging New York State government entities – and ultimately our taxpayers – when its employees failed to meet its guaranteed delivery times for overnight deliveries,” Schneiderman said. “Corporations that improperly profit at the expense of taxpayers will be held to account.”

The company settled for $4.2 million dollars, in lieu of issuing thousands of refunds, with over $1.2 million of it going back to New York and other affected local governments. In the instances where payments to one agency would be very small, it will be directed back to the state’s general fund. Under the agreement, UPS is also implementing corrective training for employees and will be monitoring them and using programs for reporting compliance. Any future delivery failures and/or violations to policies will be addressed.

The allegations came to light when whistleblower Robert K. Fulk, a former UPS employee, filed a lawsuit in Federal District Court in Alexandria, which was then investigated under the New York False Claims Act. Under that act, Fulk is entitled to part of the money recovered. Lawyers at Wu, Grohovsky & Whipple, the firm representing Fulk, said, “This settlement is a result of the successful public/private partnership anticipated by the federal and state false claims acts in identifying and stopping fraud. Because of the efforts of our client, Mr. Fulk, millions of dollars in wrongfully obtained tax payer money will be returned to the federal, state and local government.”

UPS stated that since the allegations came to light, they have make steps to correct the issues and continue to have a good working relationship with their customers in government agencies. UPS spokesperson Susan Rosenberg said, “When notified of the issues, UPS focused to improve training, systems and technology to better serve our customers.”

Previously in May, UPS paid $25 million to the Department of Justice for similar claims, as well as $740,000 to New Jersey state government.

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