August 21, 2015

DOJ Catch Of The Week — US Investigations Services

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to US Investigations Services Inc. (USIS) and its parent company, Altegrity.  On Wednesday, the Northern Virginia-based companies agreed to settle charges that USIS violated the False Claims Act by failing to provide proper background checks as required under its contract with the  Office of Personnel Management (OPM).  As part of the settlement, USIS and Altegrity agreed to forgo $30 million in payments they claim OPM owed them.  See DOJ Press Release.

According to the government, USIS deliberately circumvented contractually required quality reviews of completed background checks to increase the company’s profits.  Specifically, USIS allegedly devised a practice referred to internally as “dumping” or “flushing” where it released cases to OPM, representing them as complete, when in fact they had not received their contractually-required quality review.  The government contends OPM made payments to USIS it would not otherwise have made had it been aware the background investigations had not gone through the required quality review process.

In announcing the settlement, the government made it clear it would not tolerate these kinds of shortcuts on government contracts.  Benjamin C. Mizer, head of the Justice Department’s Civil Division, said: “Shortcuts taken by any company that we have entrusted to conduct background investigations of future and current federal employees are unacceptable.”  And Acting US Attorney Vincent H. Cohen Jr. of the District of Columbia added: “Contractors who do business for the federal government have a responsibility to provide the goods and services that they promise.”

In February 2015, Altegrity and USIS filed for Chapter 11 bankruptcy protection.  This settlement is part of a broader settlement that also resolves other matters between the companies and the government.  The allegations leading to the settlement were first raised in a whistleblower lawsuit filed by former USIS executive Blake Percival under the qui tam provisions of the False Claims Act.  He will receive a yet-to-be-determined whistleblower award.

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