The Department of Justice recently announced a settlement with a Department of Defense and Department of Veterans Affairs (VA) contractor who was hired to provide patient monitoring equipment. Like many government contracts, the contract with this company (Spacelabs Healthcare, LLC) contained a Price Reductions Clause clause that required the company to charge the government the lowest price of any of its customers.
“Most Favored Nations” Clauses In Government Contracts
These clauses, also called “Most Favored Nations” (MFN) pricing clause are common in government contracts to ensure that contractors do not overcharge the government. The clause requires contractors to provide the government with the best price they offer to any other customer. This prevents contractors from charging the government more than they charge other customers, which could otherwise lead to contractors taking advantage of the government’s lack of negotiating power. Unfortunately, some companies use a variety of schemes to avoid complying with the letter and spirit of these requirements. For example, in addition to simply charging a lower price to a customer that is not the government, contractors may provide the government with a lower price but still overcharge the government by offering a lower quality product or service or by providing products or services to the government which it purports to be different than those it provides to other companies but which in truth are substantially the same.
False Claims Act Cases Against Government Contractors Who Overcharge
To combat this type of fraud, the government has increasingly relied on qui tam lawsuits brought by whistleblowers who have knowledge or evidence of overcharging. These lawsuits are filed by whistleblowers who have evidence that a company has defrauded the government. These lawsuits can be filed against contractors who are found to be overcharging the government, and they can be used to recover funds that were taken from the government illegally. The settlement recently announced by the DOJ follows this trend. In the settlement, the government recovers $2.5 million, over $435,000 will be awarded to two whistleblowers who came forward to aid the government in pursuing its qui tam case. In announcing the settlement, the US Attorney responsible for the litigation stated that” “Federal contractors are expected to deal honestly with federal agencies and faithfully abide by the terms of their government contracts…[and that] This settlement demonstrates that our Office will diligently investigate and hold accountable those companies that fail to live up to their end of the bargain and unfairly overcharge taxpayers.”
What To Do If You Have Knowledge Of Overcharging On A Government Contract
At our law firm, we specialize in representing both whistleblowers in qui tam lawsuits. We understand the complexities of MFN clauses and government contracts and work hard to ensure that the rights of whistleblowers are protected. If you or someone you know has evidence of a government contractor overcharging the government or violating an MFN clause, please contact our law firm today. We are experienced in qui tam lawsuits and we can provide you with the legal representation you need.
At Price Armstrong, our qui tam attorneys have extensive experience representing whistleblowers. If you have information about fraud, you may have a valuable claim as a whistleblower. Contact us today for a free initial consultation and review of your case.
