The New York Attorney General announced an $18 million settlement with Compass Group USA, Inc., a food management services provider, for overcharging 39 schools and school districts across the state. In addition to the monetary settlement, Compass entered into a first ever Nutritional Code of Conduct to ensure better quality food in schools. It is alleged that from 2003 through 2010, Compass failed to pass along to the schools rebates it received from food vendors as required by law and thereby overcharging the schools. $3 million of the settlement will be returned to the schools and the remaining $15 million will benefit New York state taxpayers.
As part of the groundbreaking Nutritional Code of Conduct, Compass will be required to comply with the nutritional standards in the Healthy, Hunger-free Kids Act passed by Congress in January 2012. Compass will also be required to provide written disclosures to their school clients for the next two years explaining their rebating practice and notifying them of an independent auditor’s review of their account. Compass will also create a rebate specific hotline and will submit semi-annual independent auditor’s reports of their rebate practice to the Attorney General for at least the next two years. Lastly, Compass will be required to provide the Attorney General with semi-annual written reports of their progress on compliance with the Nutritional Code of Conduct. The allegations arose from an industry wide investigation by the Taxpayer Protection Bureau into food distributors contracting with the state.
If you are aware of any person, corporation or entity that you think may be violating the Federal False Claims Act or a State False Claims Act, contact us today.
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