United States Attorney's Office
Eastern District of Missouri
January 10, 2017
Government Contractor Pays $4 Million to Resolve Pricing and Sourcing Allegations Brought Under the False Claims Act
St. Louis, MO – ICP Medical (“ICP”), a government contractor based in Earth City, Missouri, has signed a civil settlement agreement and paid $4,000,000 to resolve allegations that it submitted false claims for medical items to the U.S. Department of Veterans Affairs (“VA”) and U.S. Department of Defense (“DoD”).
Generally, a contractor that that sells goods to VA and DoD must treat the Government as the “most favored customer” and provide it with the contractor’s best pricing. Moreover, a contractor that sells goods to VA and DoD can only source the goods provided under Government contracts from either the United States or other designated countries. Sourcing goods from China is typically prohibited under Government contracts.
The civil settlement agreement announced today resolves two types of allegations about ICP. First, the agreement resolves allegations that ICP made false disclosures to VA and DoD regarding the discounts and prices it was providing to other customers for assorted medical products, such as surgical gowns, sheets, and scrubs, and therefore used inflated prices with the Government that were not as low as they should have been.
Second, the settlement agreement contends that ICP obtained specific products from China, including body bags, gowns, and scrubs, and before shipment to VA and DoD facilities removed “Made in China” designations from their packaging, placed them in new boxes, and added U.S. Flag stickers to some packages. The agreement resolves allegations that ICP made false statements to VA and DoD about the Country of Origin for some products, and therefore sold products that were not from approved countries as required by the Trade Agreements Act.
“We believe this agreement to be a fair resolution to the civil matter at hand. The VA Office of Inspector General will continue to monitor the actions of contractors to ensure that the VA gets the best quality and pricing for the products and services it needs. We encourage anyone who has knowledge otherwise to bring such matters to our attention,” said Gregg Hirstein, Special Agent-in-Charge of the VA’s Office of Inspector General, Central Field Office. VA’s hotline for complaints of fraud is 1-800-488-8244. Complaints may also be submitted by e-mail to: [email protected] or at http://www.dodig.mil/hotline/hotlinecomplaint.html or [email protected].
This settlement resolves a lawsuit that was filed by a former employee of ICP Medical in federal court in St. Louis, Missouri. That lawsuit was filed under the qui tam or “whistleblower” provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The case is captioned United States ex rel. McDonnel v. ICP Medical, Case No. 4:14-CV-2042 JAR. The claims resolved by this settlement are allegations only, and there has been no determination of liability.
The allegations were investigated by the Office of Inspector General for the U.S. Department of Veterans Affairs, the Office of Inspector General for the U.S. Department of Defense, and the Office of Inspector General for the U.S. General Services Administration.
Source: U.S. Attorney's office press release
