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Insurers Say They Won’t Pay for Preventable Medical Errors

Employers could begin to see cost savings and improvements in the quality of health care in the next year as more private insurers plan to follow the federal government’s lead in refusing to pay hospitals for medical errors.



In recent months, Blue Cross and Blue Shield, Aetna and WellPoint have said they will look for ways to stop paying for certain preventable errors called “never events” or “serious reportable events” by the National Quality Forum, a coalition of employers, doctors and policy-makers that has identified 28 adverse medical events. The group describes these errors in a 2006 report as “serious, largely preventable” medical mistakes.



Spokesmen for Cigna and UnitedHealthcare say the companies are looking into developing a policy to stop paying for these medical errors. Cigna plans to have a national policy in place by October, by which time the Centers for Medicare & Medicaid Services (CMS) says it will stop reimbursing hospitals for the added cost of care to treat eight conditions that are considered among the most common and most preventable errors.



Those conditions include: leaving objects in the body during surgery; using the wrong blood type; air embolisms; catheter-associated urinary tract infections; vascular catheter-associated infections; bed ulcers; certain surgical site infections; and hospital-acquired injuries like burns and broken bones sustained from falls.



Though medical errors account for only a fraction of the $2.1 trillion national health care bill, not paying for them has long been seen by employers as the best way to exert financial pressure on hospitals to improve the quality of the care they deliver. But it was not until CMS said in October that it would no longer pay for medical errors that other insurers followed suit.



“CMS is the 2,000-pound gorilla,” says Helen Darling, president of the National Business Group on Health, which last year began asking its members, mainly Fortune 500 companies, to stop paying for never events. “Once CMS made its announcement, we knew the hard stuff was over.”



The business group has created a tool kit to help employers include language in contracts with hospitals that would waive fees associated with medical care that harms patients or is necessary because of a previous medical error. Hospital associations in Massachusetts, Minnesota and Indiana have said they will not bill for certain medical errors.



A spokesman for the health insurance trade group America’s Health Insurance Plans said the change among insurers came in part because of pressure from employers who did not want to pay for poor care.



“In the long run, with a view toward providing not only the safest [but] highest-quality care, you can ensure that employers and employees will not pick up the tab for mistakes in a hospital setting,” says the association’s spokesman, Mohit Ghose.



The next challenge facing this movement is to design billing codes that trigger fee waivers. As consensus over not paying for medical errors builds among payers and providers of health care, employers will find it easier to put these standards into contracts with hospitals, says Jim Conway, senior vice president for the Institute for Healthcare Improvement.



“You will see hospitals that are not surprised that employers want to put that language into a contact, because it is being routinely discussed now,” he says.


—Jeremy Smerd


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SEC Charges Former Workers’ Compensation Executives With Fraud

The U.S. Securities and Exchange Commission has charged five men with defrauding shareholders of $30 million from a now-defunct employee leasing company that provided workers’ compensation insurance and other services to employers in 32 states.


The SEC civil fraud complaint, filed in U.S. District Court in Miami, stems from the 2006 collapse of Certified Services Inc., a publicly traded Fort Lauderdale, Florida-based company that provided workers’ comp, payroll and tax withholding services to 1,900 small and midsize companies with a combined 53,000 workers. Certified was consolidated in May 2006 into the existing Chapter 11 reorganization of a subsidiary, Certified HR Services Co.


Named in the lawsuit are W. Anthony Huff, a convicted felon who allegedly controlled Certified, though he was not an officer of the company; Danny L. Pixler, the company’s former president; Anthony R. Russo, a former CEO and CFO; Otha Ray McCartha, Certified’s former chief risk officer; and Charles J. Spinelli, a Certified consultant.


The SEC charges that the defendants falsified Certified’s financial statements by reporting as assets 16 bogus letters of credit purportedly worth $47 million, and by failing to report liabilities for workers’ comp claims that at their peak reached $65 million.


At the same time, Huff and Pixler siphoned about $30 million from Certified through a sham “risk allocation agreement” under which an affiliate company, Midwest Merger Management of Louisville, Kentucky, was to assume Certified workers’ comp exposure, the SEC charges. Midwest was created by Huff and Pixler, according to the complaint.


McCartha and Spinelli were convicted last year on criminal fraud charges related to the bogus letters of credit and were sentenced to 24 months and 21 months in prison, respectively. Both have settled the SEC charges, agreeing to permanent injunctions barring them from violating securities laws.


The suit seeks similar injunctions against the other three defendants, along with disgorgement of allegedly stolen funds.


Russo called the SEC charges “completely baseless” and said that “this suit will be vigorously defended.”


Donald L. Cox, a Louisville lawyer representing Huff, denied the SEC’s charges, saying that Huff did not know the letters of credit were fraudulent, had no part in Certified’s accounting decisions and did not divert Certified funds through Midwest.


Huff and Cox also noted that Certified’s court-appointed bankruptcy trustee agreed to sell some assets of Certified’s business to O2HR, a Fort Lauderdale-based professional employer organization for which Huff said he raised capital.


According to bankruptcy court filings, Certified made a deal to sell virtually all of its business to O2HR in September 2005, after its subsidiary, Certified HR Services, had already filed for Chapter 11 protection. The bankruptcy trustee then sued O2HR, charging that the deal represented a fraudulent transfer of estate property and seeking to consolidate O2HR into the reorganization, court records show.


After months of negotiations among the trustee, O2HR, Huff and others, the court approved a settlement in May 2006 under which Certified itself was consolidated into its subsidiary’s bankruptcy proceeding; O2HR agreed to pay the estate $10.3 million in installments; and O2HR acquired portions of Certified’s business, the filings show.


In 2004, Huff was convicted on federal mail fraud charges in an unrelated scheme and sentenced to 12 months’ probation. The Kentucky Insurance Department had previously revoked his insurance agent’s license as a result of an alleged $113,000 premium theft, according to the SEC’s complaint.


Filed by Douglas McLeod of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Mulally Departing HR Chief Laymon Leaving Ford ‘in Great Shape’

Ford Motor Co. group vice president Joe Laymon has resigned and will be replaced as head of human resources by Felicia Fields, the automaker said Tuesday, March 25.


Laymon, 55, has been with the company since 2000. Laymon was named vice president of human resources and medical services at Chevron Corp., effective immediately.


Marty Mulloy will continue to lead labor relations at Ford, but now will have global responsibilities. He’ll report to manufacturing chief Joe Hinrichs. Fields will report to CEO Alan Mulally.


The move comes one day after Automotive News published a story in which Laymon named six possible successors to Mulally.


Mulally told Automotive News that Laymon notified Ford of his decision to leave Friday, March 21. It was Laymon’s decision to leave, Mulally said.


“He’s leaving us in great shape,” Mulally said.


Mulally said he did not know ahead of time last week that Laymon would discuss Ford’s candidates for CEO. Mulally said he wasn’t bothered by it because “everybody knows the leadership team.” But Mulally said he was a little surprised that Laymon named possible CEO successors.


“I think what he was trying to do was stress the process we use,” Mulally said.


Laymon told Automotive News he had been in discussions with Chevron since late 2007. He said he was not asked to leave Ford, and he noted that offers like the Chevron job don’t come up “overnight.”


He also said he was “at peace and very comfortable” working for Mulally and executive chairman Bill Ford.


“It would have taken another iconic global opportunity” to persuade him to leave Ford, Laymon said. “And I was approached late last year about this opportunity.”


Laymon said his interview last week with Automotive News did not play into his departure.


“I know there’s a lot of controversy about my interview,” he said. “I stand by it.”


Laymon said he rejects the notion that speaking publicly about future CEO candidates will promote infighting and make Mulally a lame duck. An article published on Fortune magazine’s Web site today discussed those possibilities.


Said Laymon: “The suggestion that the public acknowledgment of those candidates would result in back-stabbing, I would venture to say they’d result in just the opposite.”


The elevation of Fields, 42, to head of human resources is part of a succession plan that Laymon created. “She’s a consummate HR professional. She has the respect of the team companywide,” Mulally said.


Filed by Amy Wilson and Richard Truett of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Walgreen Suit Reflects EEOC’S Latest Strategies

 Almost one year ago, the Equal Employment Opportunity Commission launched an initiative to target systemic discrimination by pursuing pattern and practice cases and class actions.

In February, the agency indicated that racial discrimination is likely to be a primary focus of that effort by introducing a campaign called “Eradicating Racism and Colorism from Employment.”


On March 7, the two elements were highlighted when the EEOC filed a class-action employment discrimination lawsuit against Walgreen Co., accusing the drug retailer of racial discrimination.


The EEOC alleges that Walgreen uses race as a factor to place managers and pharmacists in low-performing stores and in locations in African-American communities. The company denies the charges.


Although the racism initiative, which emphasizes public education and outreach, is not directly tied to the Walgreen action, the EEOC is making an example of the company.


“Certainly it reflects our commitment to looking at race and color discrimination on a nationwide basis,” said Elizabeth Bille, EEOC special assistant and counsel, after addressing a Society for Human Resource Management conference in Washington on March 12.


The EEOC has been intensifying its campaign against racial discrimination for a while, says Lynn Lieber, an employment lawyer and CEO of Workplace Answers, a consulting firm.


In April 2006, the EEOC issued guidelines for employers that warned against subtle forms of bias, such as a boss not inviting minority workers to an office lunch or a happy hour. This kind of exclusion undermines networking opportunities. It also urges companies to expand their recruiting efforts to include nontraditional sources of talent and not to rely solely on word-of-mouth referrals.


“They were very, very broad,” Lieber says of the EEOC guidelines. “The EEOC is very serious about race and color.”


It also is intent on promoting class-action cases. Lieber says courts have become more inclined to certify class actions, a trend that could cost employers. A national chain, for instance, would want a case to focus on bias at individual stores rather than having it include every African-American employee nationwide.


The damage awards in a class action can total billions of dollars.


“It could really force a company to go under,” Lieber says.


Mark Schoeff Jr.

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McDonald’s Faces Teen Labor Shortage

By David Sterrett

A new McDonald’s Corp. commercial tells the story of Karen King, who began her career as a teenage crew member in the 1970s and rose to head the company’s $10 billion Eastern U.S. division.


The spots are meant to resonate with American teenagers, who are leaving the workforce in droves—and leaving McDonald’s with a labor crunch that threatens to take a bite out of its surging sales.


“It’s a shrinking labor market, and we recognize less people will be available to hire,” King says.


The declining number of teenage job seekers presents a super-size challenge for McDonald’s, where 40 percent of the top 50 managers—including CEO James Skinner—worked their way up from the cash register or fry vat, and which more than ever needs qualified workers to keep service from bogging down in an era of computerized cash registers and electronic ovens.


“There is a direct correlation between the quality of the crew and sales restaurants do,” says Steve Bigari, a former McDonald’s franchisee who now works with fast-food companies on labor issues.


With the number of teenage applicants dwindling, McDonald’s has rolled out a new commercial emphasizing the opportunity for advancement at the company.


For years, McDonald’s has manned its crews largely with teenagers. In the 1990s, 45 percent of its U.S. employees were under 20. Today it’s 33 percent of the workforce, which totals 650,000 employees.


Getting harder out there


It’s not just that fewer teenagers are working at McDonald’s—fewer are working, period. Last year about 44 percent of American teens held jobs, down from nearly 60 percent in 1982. The reason isn’t clear, but many attribute the shift to an intensified focus on academics and after-school activities.


Whatever the explanation, the trend scares fast-food operators. “Everyone I talk to in the industry says it’s becoming harder and harder to maintain their operations standards given what is happening in the workforce,” Bigari says.


About half the employees in the fast-food industry are between 16 and 25 years old. The number of jobs in the industry is expected to increase about 17 percent in the next decade, while the number of workers in that key age group is expected to increase 0.3 percent.


McDonald’s is trying to get ahead of the coming squeeze with its aggressive new recruiting campaign, launched in May and driven by the TV ads featuring King. The company also revamped the recruiting portion of its Web site to facilitate online job applications, which are routed to franchisees, who hire the bulk of McDonald’s frontline workers.


Lurking behind the recruiting drive is another reality: McDonald’s could ease its labor crunch by raising wages. But that’s a last resort for the franchisees. Increased payroll costs come directly out of their pockets.


Steve Russell, McDonald’s U.S. senior vice president of human resources and chief people officer, says the company doesn’t feel pressure to raise wages, which vary by restaurant but average about $7.35 an hour, 26 percent more than the current federal minimum wage of $5.85.


Touch screens and new menus


At the same time it expands recruiting efforts, McDonald’s is trying to be more selective about its hires. About half of its stores require applicants to take a short test designed to measure their experience and behavior patterns. Russell says the number of stores utilizing the test quadrupled last year and the company continues to “rapidly deploy it.”


The increased scrutiny matches the rising sophistication of fast-food jobs. Burgers are no longer flipped on a griddle but cooked in an oven operated by an electronic timer. New menu items have forced kitchen staff to master new preparation techniques and have given order takers more buttons to locate on cash registers with touch screens—easy to use but often intimidating to workers uncomfortable with technology.


In the 1990s, 45 percent of McDonald’s employees were teenagers; now it’s 33 percent.


Fumbles with the equipment slow down order times—a big turnoff for customers looking for a quick meal. That’s why it’s critical to find, and keep, qualified workers. An internal McDonald’s study shows that stores with higher-performing crews reduce turnover by 30 percent and increase sales by $200,000 annually.


“Now more than ever, we realize our people are the main drivers of our business,” Russell says.


This week in Las Vegas, McDonald’s is having a meeting of 15,000 managers at which employment will be a primary topic of discussion.


Industry observers say McDonald’s has done more than any of its national competitors to promote employment, even while it may pay lower wages than some regional and national chains, such as coffee giant Starbucks Corp.


The effort may be paying off. Last year, according to Russell, McDonald’s reduced its turnover by 9 percent, matching the chain’s increase in sales, which hit $21.6 billion. The company won’t disclose its retention rate; the industry averages about 150 percent annual employee turnover.


But it remains to be seen how McDonald’s will replace the teenagers who continue to drop out of the workforce.


“There is not a readily available supply of teenage workers lined up at the door begging for jobs,” says Joni Doolin, founder of People Report, a Texas-based company that tracks employment data. “And the problem is not going away anytime soon.”


Filed by David Sterrett of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Worker Fired After Revealing He Previously Had ‘Superbug’

A Florida man who was fired November 2 may be the first American employee to lose his job for having had a drug-resistant bacterial infection that is responsible for the deaths of thousands of people in the U.S. each year.


The events that led to Morris Yomtov’s firing began innocently enough as office banter regarding news reports that the deadly “superbug” methicillin-resistant Staphylococcus aureus, or MRSA, was responsible for nearly 19,000 deaths in 2005, more than double reported by researchers five years earlier. That mortality rate, published in the October 16 Journal of the American Medical Association, surpasses the number of annual deaths attributed to HIV/AIDS or homicide.


Yomtov, a 66-year-old retiree, took a job as an account executive with CPT of South Florida, a small Miami-based IT services company, last summer to help pay his property taxes. He mentioned to co-workers that he had acquired a MRSA infection two years ago while clearing brush left in his yard after Hurricane Wilma.


“So I say, ‘It’s really a nasty thing.’ I say, ‘I came very close to having my hand amputated,’ ” Yomtov says. “An hour later the owner of the company says pack your bags and leave. He says, ‘You couldn’t have had it two years ago because it didn’t exist two years ago.’ ”


MRSA, which is most commonly acquired in hospitals but has also been seen in schoolchildren and athletes, was first discovered in England in 1961.


Yomtov says his boss was concerned that Yomtov could infect co-workers. Later, Yomtov was told he had to produce a written note from his doctor saying he was not infected before he could return to work.


Yomtov’s supervisor at CPT, Barry Hess, did not respond to requests for comment. A secretary at CPT confirmed Yomtov was formerly employed by the company.


Teresa Smith de Cherif, who recently completed her fellowship in infectious diseases at the Veterans Affairs Hospital in Miami, was one of the first physicians to treat Yomtov, who is an Air Force veteran. After several courses of antibiotics, the infection cleared and Yomtov’s swollen left hand returned to normal.


She says she told Yomtov’s boss over the phone and in writing that he was fine and should be able to work. Nonetheless, Yomtov says, on Friday, November 2, a vice president at CPT told him he was fired.

“He just said, ‘Don’t come Monday,’ ” Yomtov says.


Yomtov has filed a complaint with the Equal Employment Opportunity Commission, but Kelly-Ann Cartwright, an attorney specializing in employment law in the Miami office of Holland and Knight, says his case may be limited. Florida is an “at-will” state, meaning employers can fire employees without having to show why.


Other than HIV/AIDS, state law does not provide protection for people fired for having an infectious disease, she says. Yomtov would have to prove he was discriminated against under the Americans With Disabilities Act, which would likely require him to show that his infection was perceived by his employer to be a disability, Cartwright says.


Smith de Cherif says that while the bug is serious, requires treatment and can lead to complications, employers can avoid contagion in the workplace by becoming “advocates for employee wellness” by providing annual flu shots and other vaccines, making it easy for employees to wash hands, and providing time off to those who are sick.


“Sound principles will help prevent infections,” she says.


Yomtov says he was made a pariah, and that the case against his former employer is based on principle.


“I’m a New York boy,” says Yomtov, who is originally from the Bronx. “I was in the military. I’m not going to allow people to talk to me like that.”


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—Jeremy Smerd

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‘New GM’ Overhauls Its Corporate Culture, Sales and Marketing as Automaker Exits Bankruptcy

General Motors exited bankruptcy with an overhauled sales and marketing structure, a promise of more management changes and a message that a leaner and meaner automaker is ready to win back American consumers and pay back taxpayers.


“Business as usual is over at General Motors,” CEO Fritz Henderson said Friday, July 10, in a press conference. “Everyone associated with the company must realize this and be prepared to change—and fast.”


GM’s Automotive Strategy Board—made up of regional presidents and global function leaders—and its Automotive Product Board will be replaced by a single, smaller executive committee that will meet weekly, Henderson said.


The group will focus on business results, products, brands and customers. It will cut GM’s decision-making team in half and eliminate the company’s matrix structure, Henderson said.


A key member will be Bob Lutz, the former chief of product development who had been scheduled to retire as vice chairman and senior advisor at the end of the year.


Lutz, 77, is taking a new position as vice chairman in charge of creative design, brands, marketing and communications. He will report to Henderson.


Chiefs of GM’s brands, marketing, advertising and communications will report to Lutz, who had been succeeded by Tom Stephens, vice chairman of product development. Lutz will also work with Stephens and design chief Ed Welburn “to guide all creative aspects of design.”


GM is eliminating its North American strategy board and the North American president position held by Troy Clarke. Henderson said he will head the money-losing North American unit.


“I have a number of moves that need to be made in the next couple of weeks, including with Troy, but the job no longer exists at this point,” Henderson said.


With Lutz’s move, Henderson said, GM will split its marketing and sales functions.


This will result in changes in Mark LaNeve’s job as GM North America’s vice president of vehicle sales, service and marketing, Henderson said.


“Sales will report directly to me,” he said. “We actually have a huge amount of change going on. Mark is head of sales today. We have a huge number of changes to take place between here and the end of this month, and Mark is responsible for hitting the sales numbers this month.”


Henderson said GM will have new positions in place by the end of the month. Those will involve some retirements and some people leaving the company, he said. Some people will receive new appointments within the new GM.


“I would have had this done had we closed July 31st, but we closed July 10th,” Henderson said. GM filed for bankruptcy June 1 and originally projected its exit could take as long as two months.


A whirlwind 39-day bankruptcy for GM concluded with the closing of a deal to sell key operations and the core brands to a new company majority-owned by the U.S. government.


Shaking up GM’s long-criticized corporate culture will be a key issue for Henderson as the 100-year-old automaker seeks to relaunch itself.


Steve Rattner, head of the Obama administration’s auto task force, said this week that it would be natural for Henderson to cut layers of management to make the company “a bit closer to the ground, leaner and meaner.” Henderson took over as CEO when his predecessor, Rick Wagoner, was ousted by the task force at the end of March.


The close of the court-approved sale would mark the completion of an unprecedented effort by the U.S. government to save GM and Chrysler from liquidation by slashing debt, labor costs and dealerships.


The new GM will have slashed its debt and health care obligations by $48 billion and dropped almost 40 percent of the dealers from an unprofitable network.


GM also will take advantage of a new labor contract with the United Auto Workers that the company says will put its hourly operating costs on par with Japanese competitors led by Toyota Motor Corp.



Filed by Chrissie Thompson of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com

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GM Won’t Be Alone in Freezing Its 401(k) Match, Experts Predict

Employees aren’t the only ones thinking about suspending their 401(k) contributions as a result of the economic crisis. Many employers may be discussing a similar move with regard to 401(k) matches, experts say.


On Thursday, October 23, General Motors announced it was suspending its 401(k) match as one of many ways the Detroit automaker is trying to cut costs. The company had matched salaried employees’ 401(k) contributions up to 4 percent.


And while General Motors might be an extreme example of how some companies are being battered by the financial crisis, some experts say the automaker won’t be alone in its decision to freeze its 401(k) match.


“A number of companies did this during the bear market in 2001,” said Ted Benna, who is known as the founder of the first 401(k) plan and is COO of Malvern Benefits Corp., a 401(k) plan administrator. “We are in a very nasty situation that isn’t going to get better for some time and a lot of employers are going to be anxiously looking at how to reduce costs.”


In 2001, GM became one of the handful of large employers to freeze its 401(k) match, but the automaker resumed it when business began to pick up.


Even though these moves by employers are temporary, they can still have a substantial effect on employees’ ability to save for retirement, said Alicia Munnell, director of the Center for Retirement Research at Boston College.


“You would think that people would increase their contributions to offset the loss of their match, but that rarely happens,” she said.


This can be particularly difficult for low-income workers who need the employer match to have any kind of retirement nest egg, said Don Stone, president of Plan Sponsor Advisors, a Chicago-based 401(k) consultant.


The good news is that while some companies may suspend their 401(k) matches, it shouldn’t have as much impact on employees’ contribution rates as it has in the past, said Lori Lucas, defined-contribution practice leader at Callan Associates. That’s because more employers have adopted automatic enrollment.


“Typically when employers suspend their match, we see participation decrease, but we may see less of that in this environment,” she said.


Some experts believe few employers will freeze their 401(k) match.


“Companies that have a 401(k) plan as their only retirement savings program are less likely to stop contributing to these plans, because it’s the only thing they are doing,” said Dallas Salisbury, president of the Employee Benefit Research Institute. “And it sends the message to employees that the company is in dire circumstances.”


—Jessica Marquez


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Female Airline Pilot’s Sex Bias Case Can Proceed


A federal appellate court said Tuesday, September 8, that a female pilot who alleged sexual discrimination in connection with her termination can proceed with her case.


Tiffany Anne Nicholson, who acknowledged having had an affair with a fellow pilot, said she was allegedly dismissed for her poor communication skills but was not given the same opportunity for retraining given to male pilots who had the same issues, according to the decision by the 9th U.S. Circuit Court of Appeals in Nicholson v. Hyannis Air Service Inc.


According to the decision, Hyannis, Massachusetts-based Hyannis Air Service, a small regional airline, selected Nicholson as one of eight pilots to launch its new service providing flights between Guam and neighboring Micronesian islands. The group included a captain with whom Nicholson had had a yearlong sexual relationship, court papers say.


According to the decision, Nicholson’s supervisors and other pilots reported she “exhibited problems with her communication and cooperation skills,” and she was subsequently terminated. She sued, claiming sex discrimination in violation of Title VII of the Civil Rights Act of 1964.


Nicholson claimed the airline’s “actual purpose in disciplining her was to remove an object of sexual competition from its Guam service,” and that she was not “provided the same retraining opportunity provided to the male pilots who failed portions of their training.”


In overturning a lower court ruling granting summary judgment dismissing the case, the three-judge appellate panel ruled the evidence “taken in the light most favorable to Nicholson, is sufficient to raise a genuine issue of material fact as to whether she was qualified and whether similarly situated male pilots were treated favorably.”


Nicholson also “introduced the minimal evidence required to raise a factual issue regarding whether [the airline’s] actions were taken because of her sex,” said the court, which remanded the case for further proceedings.



Filed by Judy Greenwald of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Accenture Settles Whistle-Blower Lawsuit for $63.7 Million

Accenture has agreed to pay $63.7 million to resolve a whistle-blower lawsuit over the issue of false claims to federal agencies, the Justice Department said.


The lawsuit, which was filed in federal court in Little Rock, Arkansas, alleged that Accenture submitted, or caused to be submitted, false claims for payment under numerous contracts with federal agencies for information technology services.


“Accenture has agreed to resolve allegations that it received kickbacks for its recommendations of hardware and software to the government, fraudulently inflated prices and rigged bids in connection with federal information technology contracts,” the Justice Department said Sept. 12 in a written statement.


The agency said the lawsuit was filed initially by Norman Rille and Neal Roberts under whistle-blower provisions of the False Claims Act, which permits private individuals to bring a lawsuit on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The lawsuit was filed in 2006 and the Justice Department intervened in the case in 2009.


The portion of the proceeds to be paid to the whistle-blowers in this case has not yet been resolved, according to the Justice Department.


A spokesman could not be immediately reached for comment on Rille’s and Robert’s relationships to Accenture.


Accenture issued a written statement that said it and the Justice Department had agreed to settle the case “to avoid additional time, inconvenience and expense that would come with protracted litigation.” It said the agreement is not an admission of liability, and that it “continues to vigorously deny that there was any wrongdoing.”  


Filed by Judy Greenwald of Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.


 


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