An apple a day may keep the doctor away, but in a recent FCA lawsuit it invited the attention of the district attorney. A former employee of FreshPoint Inc., the largest fresh produce distributor in North America, filed a qui tam action against the food giant, alleging that it submitted inflated invoices to the Department of Defense in connection with the sale of fresh fruits and vegetables. At least a portion of this produce was earmarked for military troops.
Specifically, the complaint accused FreshPoint of overcharging the government for thousands of produce sales over a two-year period by improperly adding random price mark-ups to invoices. In a sense, the government did not overpay for the produce; these mark-ups simply brought the price of the fruits and vegetables to the market value. However, this was not the deal that FreshPoint had made with the Department of Defense in a series of 15 separate supply contracts. Rather, as with most government supply contracts, The United States had negotiated a steep discount for the products—in this case, millions of dollars under market value.
The United States Attorney's Office for the Southern District of Georgia opted to intervene in this case, noting that "enforcement actions such as this are necessary to protect American taxpayers and to protect our troops.” According to a recent press release, the government and FreshPoint successfully settled the allegations for $4.2 million.
This settlement, according to United States Attorney Edward J. Tarver, sends the message that “All contractors who do business with the Government are expected to abide by the rules, no matter who you are."
For additional information on this case, please see two bulletins: FreshPoint, Inc. Pays $4.2 Million to Settle False Claims Litigation from the U.S. Attorney's Office for the Southern District of Georgia and FreshPoint Inc. to Pay $4.2 Million for Overbilling the Department of Defense for Produce from the U.S. Justice Department.