Friday, September 21, 2012

Sodexo settlement paved the way for Compass Group USA's $18 million settlement

Foodservice management company Compass Group USA has paid $18 million to the state of New York to settle charges that it cheated New York schools for more than seven years by pocketing rebates from food vendors rather than passing those credits on to New York schools. 

The investigation by the New York Attorney General’s office and subsequent settlement with Compass Group USA is due in large part to a “qui tam” lawsuit against foodservice management giant Sodexo, filed by Phillips & Cohen LLP on behalf of whistleblowers under the New York False Claims Act.

Sodexo, like Compass Group USA, was charged with illegally pocketing vendor discounts, or “off-invoice rebates,” and in July 2010 agreed to pay $20 million to settle charges. After the Sodexo settlement, the New York Attorney General’s office launched an investigation into rebate practices by Compass Group USA and other foodservice companies. The Sodexo settlement remains the largest non-Medicaid settlement under the New York False Claims Act.