Government Procurement Fraud

Forty-Two California Government Entities Join Whistleblower Suit Against Nation’s Largest Wireless Carriers

San Francisco, CA (December 8, 2015) – More than 40 California government entities have joined a lawsuit filed by a whistleblower against Verizon, AT&T, Sprint, and T-Mobile. The case, brought in Sacramento County Superior Court under the California False Claims Act, alleges that the wireless companies overcharged government customers by more than $100 million. The government intervenors and the whistleblower are represented by Constantine Cannon LLP. The action was unsealed by the Court on December 7, 2015. The wireless companies are alleged to have ignored two cost-saving requirements included in the master contracts under which California state and local government customers purchased wireless services.  Specifically, the master contracts required the carriers to determine and report to the government customers which rate plan selections would result in the lowest cost – referred to as “rate plan optimization” – and to provide wireless services at “the lowest available cost.” Rate plan optimization is a computerized service that analyzes individuals’ usage patterns quarterly and identifies the least expensive service or rate plan for each phone or user. Selecting the rate plan that best matches usage patterns reduces costs by 20-30% over the term of a contract.  Although the master contracts with the government required it, the wireless carriers did not prepare or provide rate plan optimization reports, the lawsuit alleges.  Further, as the carriers did not bill government customers utilizing the most cost effective rate plans, the defendants are also alleged to have failed to provide service at the “lowest available cost.”  The carriers’ failure to live up to their contractual promises, the lawsuit alleges, resulted in overcharges to the government of more than $100 million. “The carriers promised optimization in order to win these government contracts, which are worth billions of dollars,” said Anne Hayes Hartman, a partner at Constantine Cannon with extensive experience representing whistleblowers and government entities in False Claims Act cases. “But while they were happy to take the government’s money, the carriers simply ignored their commitments to bill using the lowest cost rate plans.  The carriers profited and taxpayers paid the price.” “We look forward to recovering the lost savings and securing ongoing contract compliance for the many government entities that were damaged,” said Wayne T. Lamprey, a partner at Constantine Cannon and former Assistant U.S. Attorney. The action was brought by OnTheGo Wireless, which has been one of the leading rate plan analysis firms in the country and a pioneer in the field of rate plan optimization. The case is State of California et al. ex rel. OntheGo Wireless, LLC v. Cellco Partnership et al., Case No. 34-2012-00127517 (Super. Ct. Cal., Sacramento County). Intervening Entities Regents of the University of California Los Angeles County Madera County Marin County Orange County Riverside County Sacramento County San Bernardino County Santa Cruz County Sonoma County Stanislaus County Yuba County City of Capitola City of Chino City of Corona City of Fortuna City of Long Beach City of Oxnard City of Rancho Cucamonga City of Ripon City of Riverside City of Sacramento City of San Bernardino City of San Mateo City of Santa Cruz City of Santa Rosa City of Vernon City of Victorville Grossmont Union High School District Irvine Unified School District Kaweah Delta Health Care District Kings Canyon Unified School District Olivenhain Municipal Water District Sonoma County Water Agency Rosemead School District Saddleback Valley Unified San Diego Unified School District Santa Cruz Public Libraries Torrance Unified School District Victor Valley Transit Authority Whittier Union High School District Woodbridge Fire District   About Constantine Cannon LLP Constantine Cannon, with offices in New York, Washington D.C., San Francisco and London, has deep expertise in practice areas that include antitrust and complex commercial litigation, whistleblower representation, government relations, securities and e-discovery. The firm’s antitrust practice is among the largest and most well recognized in the nation. Constantine Cannon’s experience spans across multiple industries including healthcare, banking, electronic payments, insurance, high tech, telecommunications, the Internet and government contracting. Constantine Cannon’s whistleblower lawyer practice represents whistleblowers under the False Claims Act, the Dodd-Frank Act, and the various federal and state laws that encourage industry insiders to report evidence of fraud or misconduct. The firm was one of the first in the country to bring a claim under the whistleblower provisions of the Dodd-Frank Act.

December 8, 2015

Government interventions in Constantine Cannon led whistleblower cases against the major wireless companies, as reported in: • Suit claims Verizon, other mobile carriers overcharged agencies, San Francisco Chronicle; • Verizon, AT&T Face $100M Overcharge Claims By Calif. Gov’ts, Law360 and; • California Governments Sue Wireless Carriers, Capitol Public Radio.

October 21, 2015

United Parcel Service has agreed to pay $4 million to resolve allegations that the company violated the false claims acts of 14 states, New York City, Washington D.C., and Chicago.  Under contracts at issue between UPS and the government, UPS guaranteed delivery of packages by certain specified times the following day. The investigation began after a UPS employee filed a federal whistleblower lawsuit in Virginia alleging that a practice of falsifying package arrival times and logging in phony reasons for late arrivals went on company-wide. The UPS employee alleged that, in some cases, bogus exception codes excusing late deliveries were entered into the tracking system before UPS drivers had even arrived at locations where cumbersome security procedures and other delays had purportedly occurred. The state settlement follows an earlier $25 million settlement with the federal government.  NJ; NY

August 17, 2015

Following a special audit, the Indiana Attorney General has filed a lawsuit against a maintenance product company and a former school maintenance director demanding repayment of nearly $1 million for their illegal bribery and kickbacks scheme that defrauded the Warsaw Community Schools. IN

June 9, 2015

Josh Harman will receive a whistleblower award of nearly $19 million from the $663 million highway guardrail maker Trinity Industries was ordered to pay for violating the False Claims Act by defrauding the Federal Highway Administration by making a critical change to the dimensions of its ET-Plus guardrail in 2005, but failing to tell federal regulators as required by law.  NYT

June 5, 2015

Former DC Public Schools employee Jeffrey Mills will receive a yet-to-be-determined whistleblower award from the $19.4 million paid by Chartwells, a division of Compass Group USA, Inc. and Thompson Hospitality Services LLC to settle charges the company violated the False Claims Act by overcharging DC public schools in connection with its school lunch program contracts.  DC

January 14, 2015

Office Depot agreed to pay $68.5M to settle charges in violated the California False Claims Act by allegedly overcharging more than 1,000 cities, counties, school districts and other government entities in California for office supplies. According to the government, Office Depot was required to but did not provide these government entities the lowest prices it was offering other government purchasers. The allegations originated with a whistleblower lawsuit filed by former Office Depot employee David Sherwin. Corporate Crime Reporter