A whistleblower helped uncover a scheme by a Missouri-based government contractor where the company not only allegedly overcharged the government for its products, but also allegedly violated country of origin labeling requirements.
ICP Medical, which manufactures medical equipment like gloves and curtains for hospitals, agreed to pay $4 million to settle the “qui tam” (whistleblower) lawsuit.
The former company employee, who originally brought the lawsuit in 2014, alleged that ICP Medical submitted false claims to the government in two ways:
- The company charged the Department of Veterans Affairs and the Department of Defense inflated prices for products such as surgical gowns, sheets and scrubs despite the typical requirement that government contractors give the government the best price possible.
- The company also allegedly removed “Made in China” designations from supplies like body bags, and then relabeled the products as made in the U.S., sometimes adding a US flag sticker. Contractors typically are banned from selling products from China to the government.
The Centers for Disease Control and Prevention contracted with ICP Medical in 2014 to supply medical equipment as the CDC ramped up its Ebola quarantine efforts.
ICP president Brian Sanders said any improper conduct occurred under prior management and involved employees who no longer work with the company, according to an Associated Press report.
Whistleblowers can use the False Claims Act to stop companies that violate country of origin labeling requirements or otherwise misclassify imported goods. In May 2016, furniture retailer Z Gallerie paid $15 million for misclassifying wooden bedroom furniture it imported from China in order to avoid dumping taxes.
The False Claims Act and its “qui tam” provision enable private citizens, with the assistance of a lawyer, to file lawsuits against companies they believe to be defrauding the government. The whistleblower is then eligible to receive up to 25 percent of the total recovery if the government joins the case.