Last week the Department of Justice announced that American Airlines will pay over $22 million to settle claims that it falsely reported delivery times for mail it delivered on behalf of the United States Postal Service.
Under a contract between USPS and American, the airline was responsible for picking up U.S. mail from various receptacles in the United States and in U.S. government offices abroad, and delivering that mail to domestic and international locations. Among the mail was correspondence sent to U.S. soldiers deployed in foreign countries. To receive payment, American had to scan the mail receptacles and submit those scans to USPS, indicating the time at which the mail was delivered. American would be subject to penalties under the contract for delivering mail late or to the wrong location.
DOJ alleged that American, in violation of the False Claims Act, had submitted scans to USPS falsely reporting delivery times. Commenting on the settlement, American noted that USPS is an important customer and that the allegations arose from conduct that the airline had remedied years ago.
This is not the first time that DOJ has used the False Claims Act to go after carriers for making misrepresentations to the government regarding deliveries. In May 2016, Menlo Worldwide Services Inc., Estes Forwarding Worldwide, and Estes Express Lines paid $13 million to resolve whistleblower claims that they had overcharged the government in various ways, including by billing the government for moving freight by air when they had shipped it by ground. In October 2015, UPS Inc. paid nearly $30 million to settle whistleblower claims that the company had been falsely reporting delivery times to avoid paying refunds to state and city governments for late delivery of packages.
DOJ recovered $2.8 billion from False Claims Act cases during the fiscal year 2018. While impressive, that number marks a significant decline from the DOJ’s recoveries in fiscal years 2016 ($4.7 billion) and 2017 ($3.7 billion). However, American’s settlement is a reminder that the False Claims Act continues to be a powerful and versatile tool for the federal government to combat fraud across various industries.