Price Fixing

Price fixing is a violation of federal antitrust laws whether done against the general public or the government. Many violations are civil in nature, but many cases, especially those who commit fraud against the government carry criminal penalties. Federal law provides two main laws for enforcing antitrust regulations: the Sherman Act and the False Claims Act.

The Sherman Act of 1890 outlawed collusion and any activity that promoted monopolization of business. The Sherman Act does not prohibit every restraint of trade or business, but unreasonable practices like price-fixing, which harms consumers, taxpayers, and the government. In fact, no defense for price fixing exists; evidence of price fixing automatically serves as a violation of the Sherman Act. Penalties can be severe and often are when price fixing is involved. Corporations who are guilty of price fixing face up to $100 million in fines and individuals face one million in fines and up to ten years of prison time.

When fraudulent contractors engage in price fixing to take advantage of the federal government, the False Claims Act (FCA) comes into play. This law allows individuals to file a qui tam lawsuit against those who committed pricing fraud against the government. The party bringing suit serves as a realtor who sues a fraudulent party on behalf of the government. These are civil actions without criminal penalties, but they do carry harsh fines above and beyond recovery.

A whistleblower is an employee or individual who reports companies who reports companies who participate in poor business practices, including contractor fraud and government price fixing. Whistleblowers who expose fraudulent activity serve the public interests and help ensure a level playing field for other employees and companies. Yet, choosing to report a company can be an anxiety-inducing thought for some. It takes an immense amount of courage and a strong moral compass for a whistleblower to come forward; federal law rewards these actions by offering protection and a reward for those who expose parties who are defrauding the government.

The FCA offers whistleblower protection under the Anti-Retaliation provision of the law. A company who has been reported for fraud cannot retaliate against an employee, a contractor, or any other whistleblower. If a company retaliates against a whistleblower, the FCA entitles an individual to twice back pay plus interest, special damages, and attorney fees. Finally, the FCA rewards whistle blowers for up to 30 percent of any money recovered by the government in a qui tam case. Some recent examples include:

• One of the most recent examples of price fixing includes Walgreens, the famous pharmacy chain. In January 2019, they settled two whistleblower lawsuits for $269.2 million dollars. Two pharmacists filed a complaint under the False Claims Act revealing Walgreens had been over-billing Medicare and Medicaid from 2006 to 2017 for hundreds of thousands of insulin pens. Walgreens pharmacies gave pens to patients when they knew patients did not need them. This suit settled for a little over $209 million.
• In a second whistleblower lawsuit, Walgreens has to pay $60 million to resolve claims under the False Claims Act because they overcharged Medicaid from 2008 to 2017. The company failed to disclose and offer the same discount prices to Medicaid as it did to the public with its Prescription Savings Club program. A former pharmacy manager at a Florida Walgreens filed the original whistleblower claim in 2012.
• Another recent example of a whistleblower lawsuit includes military contractor fraud. SK Energy Co. Ltd, GS Caltex Corporation, and Hanjin Transportation Co. Ltd. paid $236 million collectively to resolve allegations under the False Claims Act. The South Korean companies fixed bids and prices for more than a decade, overcharging the federal government on defense contracts for fuel supply to United States military bases in South Korea.