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Food Service Company Settles Whistleblower Case with D.C. Schools

Washington D.C. ("D.C.") public schools have reached a $19.4 million settlement with Chartwells, a food contractor that is a subsidiary of Compass Group USA Inc. The D.C. school district alleged that Chartwells violated the United States False Claims Act by overcharging schools when providing its meal programs for children. Specifically, the complaint alleged that Chartwells was "obligated to purchase food 'at the lowest possible price'" but the company "used a corporate affiliate to purchase foods from 'companies that manufacture highly processed foods and charge higher prices.'" Additionally, the whistleblower, Jeffery Mills, ("Mills") who was previously Director of Food and Nutrition for D.C. public schools, alleged that Chartwells delivered food late, often spoiled, and frequently in inadequate amounts. Providing nutritious and quality food for students is especially important in D.C., where "a majority of students are poor, and many rely on the school nutrition program for meals."

Chartwells and the D.C. public schools originally entered into contract in July 2008 and the two parties extended the agreement in 2012. Prior to the contract agreement with Chartwells, D.C schools provided food services internally. The school district outsourced the services to the private company in order to save money that it could allocate to other needs. However, as alleged in the complaint, outsourcing food service to Chartwells actually significantly increased the price of providing meals to D.C.'s program for children in need. The D.C. public school system will continue to contract with Chartwells and plans to utilize the outside services through the 2017 completion of the agreement.

Chartwells has run into similar legal challenges, namely when it settled a case with school districts in New York for $18 million. The state alleged that the company overcharged more than three dozen school districts "by failing to pass along discounts required by their contracts." Separate from legal problems, students often have complained about the quality of the food provided by Chartwells. High school students in Farmington, Connecticut recently took to social media, posting photos of food that appeared unappetizing and unhealthy encouraging fellow students to boycott the food until Chartwells improves the quality.

According to Mills, "the issue of private food vendors prioritizing profits over the well-being of students is a national concern."6 He recommends that school districts utilizing outside vendors review their contracts and monitor costs incurred and quality of service provided. As a whistleblower, Mills said that he hopes this settlement will put private food contractors on notice that they must provide quality meals for schoolchildren at a fair price to school districts.

The legal team at SFMS has substantial experience litigating false claims matters. If you have any questions regarding this subject or this posting, please contact Valerie Chang (vchang@sfmslaw.com) or Michael Ols (mols@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is also an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES:

http://www.washingtonpost.com/news/post-nation/wp/2014/11/05/moldy-hot-dogs-human-hair-and-other-cafeteria-nightmares-prompt-students-to-boycott-school-lunches/

http://www.washingtonpost.com/local/education/dc-schools-food-vendor-pays-19-million-to-settle-whistleblower-lawsuit/2015/06/05/bae8dd3c-0b96-11e5-9e39-0db921c47b93_story.html

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