Lockport Union-Sun & Journal Online

Local News

January 9, 2013

AG: Agencies to be reimbursed

Lockport Union-Sun & Journal — A medical waste disposal company has reached a settlement in which it has agreed to pay $2.4 million for overcharging nearly 1,000 New York state clients, including three in Lockport.

The Niagara County Jail will receive a refund of more than $1,700. Other area entities that will be given refunds include Niagara County Mental Health, the Niagara County Health Department and Niagara County Community College.

Victims included police and fire departments, rescue squads, schools, jails, and hospitals across the state.

Attorney General Eric T. Schneiderman announced Tuesday that Stericycle Inc. will repay “every impacted government entity” covering the full overcharged amount, totaling about $820,000.

According to Schneiderman, Stericycle in 2003 launched a plan to charge automated price increases (APIs) without giving any notice to its customers and in violation of the contract terms.

“Stericycle improperly profited by overcharging New York taxpayers,” said Schneiderman. “In these times of harsh budget cuts to education, public health, and public safety, local governments and agencies need every available dollar and we will hold accountable corporations like Stericycle that use cynical schemes to rip off New York taxpayers.”

The agreement also requires Stericycle to permanently discontinue APIs to the New York government customers covered by the settlement and provide notice and opportunity to opt-out before any future rate increases.

The scheme was brought to the attention of federal prosecutors through a whistleblower complaint filed in federal district court in Chicago by a former Stericycle employee.

Schneiderman’s investigation of the allegations found that Stericycle had programmed its billing system to increase by 18 percent, an amount designed to go undetected by customers. The probe found the sole reason for the APIs was to increase revenue and avoid detection by these customers.

According to Schneiderman, when Stericycle customers would complain of rate increases, Stericycle employees were instructed to state that Stericycle had incurred actual increased costs due to, for example, new strict environmental regulations.

Under the state’s False Claims Act, the state may collect triple damages and between $6,000 and $12,000 per violation from corporations or people who defraud the government, or violate their obligations to pay government entities. The whistleblower also receives a portion of the recovery.

The reimbursements include:

• Niagara County Jail, $1,721.11

• Niagara County Mental Health, $100.45

• Niagara County Health Dept., $309.45

• Niagara County Community College, $1,858.17

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