The Northern District of Illinois approved the $28.5 million final settlement of the action styled US ex rel. v. Stericycle, Inc., 1:08-cv-02390 (N.D. Ill) earlier this month. Stericycle, an international medical waste disposal company, was accused of artificially inflating its prices by 18% for its state and federal government customers, totaling to almost $12 million in overcharges. Plaintiff-relator Jennifer Perez will collect a $5.5 million relator’s share of the settlement.

Stericycle, headquartered in Lake Forest, Illinois, services both government and private customers. In the initial complaint, Plaintiff-relator Perez exposed Stericycle’s suspected overpricing scheme, whereby it purportedly withheld accurate pricing data from potential customers, and then added on ‘fuel and energy’ surcharges after contracts had been finalized. Fourteen states and the District of Columbia were damaged by Stericycle’s alleged price-inflation.

Perez served as a government customer-relations specialist for Stericycle from 2004 to 2008. She became suspicious of Stericycle’s billing practices in or around 2006 when she first noticed the periodic 18% increases that were charged to government accounts in advance of services rendered.

Although the government declined to proceed with the Plaintiff-relator’s False Claims investigation, Perez and counsel were undeterred in pursuing the action. During the course of the investigation, Perez and counsel reviewed thousands of Stericycle documents spanning over a ten-year period. As a result, Perez’s relator’s share reflects a larger portion of the total settlement. Typically, a whistleblower is entitled to an award between 15% and 30% of the total amount recovered as a result of the qui tam lawsuit.

Even though Stericycle’s alleged deception cost the government around $12 million, state and federal entities will recover not only these losses, but substantial additional penalties. Under qui tam law, the government is allowed to collect up to three times the alleged damages, plus additional civil damages.

Stericycle’s suspected pricing scheme is not unique. Healthcare fraud, including Medicare fraud, is one of the most common types of False Claims Act violations. Other examples of healthcare fraud cases include billing for services or supplies that were not provided, or the submission of improper Medicare and Medicaid claims as a result of aggressive off-label marketing of name brand pharmaceutical products.