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UPS to pay $25M for false delivery claims

By Kevin McCoy / / May 19th, 2015


(Photo: David Goldman, AP)

Package-delivery giant UPS (UPS) will pay more than $25 million to settle charges it submitted false claims to the federal government in connection with delivery of Next Day Air overnight packages, the Department of Justice said Tuesday.

UPS provides delivery services to hundreds of federal agencies through contracts with the General Services Administration and U.S. Transportation Command, which supports Department of Defense agencies. The company guaranteed next-day delivery of packages by specified times under those contracts, federal officials said.

However, UPS concealed the company's repeated failure to meet those delivery guarantees from 2004 to 2014, federal prosecutors said. The subterfuge allegedly prevented government customers for seeking refunds for late deliveries.

Government officials charged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the shipments had been delivered on time.

Additionally, UPS personnel knowingly used inapplicable "exception codes" to excuse late delivery — including "security delay," "customer not in" or "business closed," government officials charged.

UPS also provided inaccurate "on-time" performance data to the federal government under the company's delivery contracts, federal officials alleged.

"The United States should get what it pays for, nothing less," said Robert Erickson, acting inspector general of the General Services Administration.

UPS said the company negotiated a settlement "to avoid lengthy and costly litigation," but continued to disagree with the government's position. The company, which did not acknowledge any liability in the settlement, will pay $25 million to the Department of Justice and $740,000 to the State of New Jersey.

"UPS values its relationships with all of its customers and continues to be a valued supplier in good standing with the federal and state government," the company said in a statement. "When notified of this issue, UPS focused to improve training, systems and technology to better serve our customers."

Government officials said the settlement resolves a federal lawsuit filed under the whistle-blower provision of the False Claims Act. That law permits private individuals to file claims on behalf of the government and share a portion of the eventual recovery.

The lawsuit was filed in Virginia federal court by Robert Fulk, a former UPS employee who will receive $3.75 million, government officials said.

UPS shares were up fractionally at $102.55 in Tuesday trading. - 24/7 Support including Chat

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