A young woman in Austin, Texas sends a letter home to her mother in the U.K. A man mails a package to his family in Colombia. A small business owner ships a product to an online customer in South Korea. They all used the United States Postal Service (“USPS”) to send their parcels. But how did the letter get to its international destination? Often, the answer is that USPS has contracted with an airline to carry mail and parcels from the United States to the foreign land. These contracts are very useful for USPS and very lucrative for the airlines. However, there have been numerous investigations into fraud concerning airlines and other government contractors allegedly defrauding the USPS in carrying out their contractual obligations.
In a press release on February 26, 2021, the Department of Justice (“DOJ”) announced that it had entered into a non-prosecution agreement and a civil settlement with United Airlines (“United”) to resolve allegations that United had been falsifying information concerning its deliveries to international destinations and defrauding USPS in the process. United agreed to pay $49 million to resolve the allegations. United had entered into International Commercial Air (“ICAIR”) contracts with USPS, by which United transported U.S. mail internationally on behalf of USPS. The contract required United to scan bar codes of receptacles when the mail had been delivered to the mail authority of the destination country. However, the DOJ alleged that United submitted automated delivery scans based on aspirational delivery times rather than actual delivery times in order to meet the requirements of the ICAIR contracts with USPS. The DOJ alleged that United was not actually meeting the deadlines and thus was defrauding USPS.
In coming to the resolution, the DOJ considered a number of factors, including the nature and seriousness of the offense, United’s failure to voluntarily self‑disclose the conduct, and United’s 2016 non-prosecution agreement related to potential criminal bribery or corruption violations. However, the DOJ gave United credit for cooperating with the investigation and implementing remedial measures once the conduct came to light. Under the non-prosecution agreement (“NPA”) with the Criminal Division’s Fraud Section, United agreed to pay $17,271,415 in criminal penalties and disgorgement. In a separate civil settlement with the Civil Division, United agreed to pay $32,186,687 to resolve False Claims Act liability stemming from the conduct. Going forward, United has further agreed to strengthen its compliance program and to submit yearly reports to the Fraud Section regarding the status of its remediation and implementation of United’s compliance program.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and qui tam litigation. If you need assistance with such a matter, please contact us today.