Food services contractor Chartwells agrees to pay $19.4M to settle whistleblower allegations involving DC school meal programs

WASHINGTON, DC, June 5, 2015 - Chartwells has settled a whistleblower lawsuit involving management of school meal programs in Washington, DC, by paying the District a total of $19.4 million. The recovery was due to the persistent efforts of a former director of food services for DC public schools and the work of the DC Office of the Attorney General.

The "qui tam" (whistleblower) complaint, and a later complaint filed by DC Attorney General Karl A. Racine, allege that Chartwells caused the DC Public Schools to pay millions more for the school meal programs than it should have paid and that the school meal programs suffered many problems under Chartwells' management, such as repeated instances when "food was delivered late, the number of meals was insufficient or the food was of poor quality or spoiled."

The whistleblower lawsuit was brought by Jeffrey Mills, executive director of the Office of Food and Nutritional Services for DC Public Schools (DCPS) from 2010 to 2013. Chartwells, based in North Carolina, is an operating group of Compass Group USA. Chartwells, Thompson Hospitality Services LLC, Compass Group USA and Compass Group North America are the defendants in both the whistleblower's and DC's lawsuits. Compass Group North America is the US division of the British multinational Compass Group PLC.

"I hope that my lawsuit against Chartwells and the settlement announced today will help improve the food programs for DC's school children, which has always been my goal," said Mills. "District funds should be used to feed students the best quality food at the lowest cost."

Mr. Mills is represented in his qui tam lawsuit by whistleblower law firm Phillips & Cohen LLP.

"This lawsuit is significant because the District's complaint alleges that Chartwells' purchasing arrangements with large manufacturers and vendors presented conflicts with Chartwells' agreement to provide DC school children with nutritious meals at the lowest price available," said Colette G. Matzzie, a Washington, DC, lawyer with Phillips & Cohen.

Phillips & Cohen filed Mr. Mills' qui tam lawsuit in 2013 under the DC False Claims Act, which allows private citizens to file civil lawsuits against companies that present false claims to DC and to recover funds on behalf of the District. The law requires qui tam lawsuits be kept "under seal," meaning whistleblower lawsuits are kept confidential to give the government time to investigate.

DC Attorney General Racine joined Mr. Mills' case on April 20 after his office investigated the allegations. The Attorney General's complaint supported many of Mr. Mills' allegations. The settlement was announced today after the court lifted the seal on the case, making the District's and Mr. Mills' complaints public for the first time.

"Jeff Mills has always tried to do what's right and best for the school children of Washington," said Matzzie said. "Using DC's false claims law, he was able to work with the Attorney General's office to recover funds that otherwise would have been lost."

During his three-year tenure, Mr. Mills developed and implemented path-breaking nutritional programs for DC school children including breakfast in the classroom, an after-school supper program and salad bar programs. Mills also implemented the new standards of the DC Healthy Schools Act, enacted by the DC City Council, and eliminated processed food and sugary-flavored milk the school meals served to tens of thousands of children. Celebrity chef Jamie Oliver called Mills a "food revolutionary" and said Mills was one of his "heroes" for leading an effort "to ensure that DC kids are getting the best and freshest food possible."

"While I was at DCPS, we found that higher test scores correlated with higher meal participation, further showing the influence that school food can have on student success," Mills said. "A strong school-meal program is especially important here in the District, where one in three children is at risk for hunger."

DC Public Schools signed a contract with Chartwells in 2008 to provide food services. That contract was renewed for three years. DC Public Schools signed another contract in 2012, despite issues under the first contract, and that contract has been renewed.

In 2012, Chartwells' parent company, Compass Group USA, paid $18 million to settle allegations by the New York Office of the Attorney General that Chartwells wrongfully retained rebates on purchases of food and non-food commodities made under contracts with 39 school districts in New York.

"The issue of private food vendors prioritizing profits over the well-being of students is a national concern," Mills said. "I urge all school districts using private food vendors to examine their contracts and the performance of those vendors. This settlement should be a wake-up call to any district struggling to do right by their students and taxpayers that the bottom line may be misleading them."

Mr. Mills and Ms. Matzzie praised Attorney General Racine for his strong leadership in this case and his outstanding team for their work that recovered taxpayer funds. In particular, they thanked Assistant Attorney General Jane Drummey, Assistant Attorney General William Causey, and Chief of the Public Advocacy Section, Bennett Rushkoff.

The DC False Claims Act rewards whistleblowers with 15 percent to 30 percent of a recovery due to the information and assistance of whistleblowers and their counsel. The reward is this case hasn't been determined yet.

The allegations made in the District's complaint and Mr. Mills' complaints are allegations only. The allegations against Chartwells have not been adjudicated. Chartwells denies liability for the allegations.

For additional information (whistleblower complaint, settlement agreement, etc.), see the "DC Whistleblower Case Against Chartwells" resource page.