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Friday, 06 May 2011 06:58

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FedEx Settles $8 Million Whistleblower Lawsuit

By Mike Holter

 

FedEx(LEGAFI) -- FedEx has agreed to pay the federal government $8 million to settle a whistleblower lawsuit that alleged the company’s couriers avoided paying shipping deadline penalties by falsely blaming late deliveries to government workers on heightened security measures taken after Sept. 11.

FedEx promises a money-back guarantee if shipping deadlines are missed. According to the FedEx whistleblower lawsuit, however, FedEx couriers handling shipments to federal offices used security delays as an excuse to mask late arrivals after they had become stuck in traffic, couldn’t find parking or late on relays of packages. The FedEx lawsuit alleges this practice began after the 2001 terrorist attacks but couriers continue to use it as an excuse 10 years later, when heightened security has subsided or become routine enough to not be an unpredictable hurdle.

FedEx denies the allegations but has agreed to settle the case to avoid ongoing litigation.

The FedEx lawsuit was originally brought under the False Claims Act by whistleblower Mary Garofolo, who retired from FedEx in 2007. Under the qui tam provisions of the False Claims Act, Garofolo will receive $1.44 million as her share of the $8 million settlement the government is due to recover.

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Updated May 6th, 2011

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