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.
