PREVENTING PRICE FIXING AND CONTRACTOR FRAUD
Each year, the U.S. government spends billions of dollars securing contracts with businesses for goods and services. They choose contractors through a bidding process intended to level the playing field for those competing for contracts. These contracts provide jobs and steady income for millions of contractors and their employees and make up a large part of the nation’s economy. Yet, companies looking to secure a government contract can collude and manipulate prices and price-related terms through a process known as price fixing.
Price fixing is a type of government contractor fraud. Committing fraud against the federal government is not only illegal, but it also hurts taxpayers and reduces or eliminates competition. This causes harm to businesses who want to land a federal contract. Those who take action against government contractor fraud and price-fixing schemes help save taxpayers money and ensure all qualified businesses have a chance to compete for a contract.
If you suspect a company is involved in price fixing against the government, contact the attorneys at Price Armstrong for a free consultation to discuss the details of your case.
WHAT IS GOVERNMENT PRICE FIXING?
Broadly speaking, price fixing occurs when competing companies make an agreement to raise, lower or stabilize prices or terms. Federal laws prohibit price fixing and require companies to set their own terms and pricing, so consumers make a fair choice among market prices determined by supply and demand, not because of an agreement. Government price fixing is a type of contractor fraud. Contractors who are doing business with the U.S government collude and make agreements about pricing to gain an advantage over other contractors.
Those who commit fraud against the government, whether military contractor fraud, construction contractor fraud, or another kind of contractor fraud, are driven by financial reasons. Price fixing reduces or eliminates competition, often resulting in higher prices for those involved. Fraudsters not only secure government contracts and ensure income, but they might benefit from more income by eliminating lower cost competitors.
IS PRICE FIXING ILLEGAL?
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.
EXAMPLES OF GOVERNMENT PRICE FIXING
Price fixing is a broad term for a type of collusion where competitors agree on aspects of pricing. It doesn’t always mean they agree on the same price. Agreements only need to restrict price competition and can come in several different forms. Examples of price-fixing schemes against the government include agreements about:
- Raising or lowering prices
- Holding prices firm
- Establishing price discounts or free offerings
- Eliminating or reducing discounts or free services
- Maintaining price differentials between products
- Minimum fees and price schedules
- Bid rigging to secure a contract
In April 2019, the U.S. Department of Justice secured guilty pleas and made arrests for contractor fraud against the government. These examples include:
- Companies rigging bids for contracts to ensure they secure pipe and duct insulation installation contracts in Connecticut, Massachusetts, and New York.
- Individuals rigging auction bids on online public auctions of surplus government computer equipment operated by the Government Services Administration (GSA).
- A Chicago-based commercial flooring contractor suppressing and eliminating competition in the commercial flooring industry by colluding with other parties to submit complementary bids, ensuring a particular company won the contract.
WHISTLEBLOWER PROTECTION & BENEFITS
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.
WHY YOU NEED A PRICE FIXING WHISTLEBLOWER LAWYER
Whistleblower cases are often complex and take years to resolve. Those who courageously speak out against fraud against the government need the appropriate legal guidance and emotional support during this process. An experienced government price fixing whistleblower attorney can be the foundation of a support system. During an initial consultation, your whistleblower attorney will evaluate the facts of your case and assess the viability of your claim based on evidence. Your attorney can gather further needed evidence to build your case and help keep your case confidential.
Although retaliation is illegal, this doesn’t always stop employers from taking negative actions towards you when they suspect you are a whistleblower. Your attorney can build your case without immediately alerting your employer of the investigation. Additionally, your attorney can help you document all interactions with your employer after you file a claim. If your employer does try to retaliate, your attorney can protect your job and ensure you receive full compensation for any damages caused by retaliation.
The experienced legal team at Price Armstrong has represented whistleblowers in many types of cases. Our continued commitment and dedication to our clients and holding fraudulent parties accountable has resulted in the recovery of millions of dollars in government money. Price Armstrong remains committed to protecting their clients and diligently pursuing the best outcome for each case, including the appropriate whistleblower reward if information you provide leads to the recovery of money lost by the government due to a price-fixing scheme.
If you suspect your employer or another company or contractor of price fixing or any other fraud against the government, contact the skilled government price fixing whistleblower attorneys at Price Armstrong at (205) 208-9888 or online for a free consultation to discuss the details of your case and determine the best course of action for your circumstances.
CONTACT US FOR A FREE CASE EVALUATION
If you have evidence of price fixing, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!