USIS Foregoes $30M to Resolve False Claims Allegations; Whistleblower Award TBD

U.S. Investigations Services (USIS) and its parent company, Altegrity, have agreed to forego collection on $30 million worth of payments supposedly owed by the federal government in order to resolve allegations that USIS knowingly submitted or caused the submission of false claims, the U.S. Department of Justice announced yesterday.

USIS provided background investigations services for the U.S. Office of Personnel Management (OPM) under various fieldwork contracts.  The government alleged that USIS deliberately circumvented contractually required quality reviews of completed background investigations in order to increase the company’s revenues and profits.  Specifically, USIS allegedly devised a practice referred to internally as “dumping” or “flushing,” which involved releasing cases to OPM and representing them as complete when, in fact, not all the reports of investigations comprising those cases had received a contractually-required quality review.  The government contended that, relying upon USIS’ false representations, OPM issued payments and contract incentives to USIS that it would not otherwise have issued had OPM been aware that the background investigations had not gone through the quality review process required by the contracts.

In February 2015, Altegrity, USIS and their affiliates filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in Delaware.  The settlement of USIS’ FCA liability is part of a broader settlement that also resolves other matters between the United States and USIS/Altegrity that were part of the bankruptcy proceeding.

The FCA lawsuit against USIS was originally filed under the whistleblower provisions of the act by Blake Percival, a former executive at USIS.  The FCA prohibits the submission of false claims for government money or property and, under the act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The United States may elect to intervene and take over the case, as it did here.  Mr. Percival’s share of the settlement has not yet been determined. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.