DOJ settles fraud lawsuit against union

Michael P. Tremoglie Jul. 30, 2012, 1:31pm

NEW YORK (Legal Newsline) - A civil fraud lawsuit was filed and settled Friday against District Council 1707, Local 95, Head Start Employees Welfare Fund, a Voluntary Employee Benefits Association in Manhattan.

The complaint alleged violations of the False Claims Act. DC1707 was accused of billing Head Start grantee higher rates for hospital insurance premiums than it had originally paid for the premiums.

DC1707admitted to the more than $3 million in overbillings and will pay about $5 million in damages. The complaint was filed in Manhattan federal court and U.S. District Judge William H. Pauley III approved the settlement.

District Council 1707, Local 95, Head Start Employees Welfare Fund administers hospitalization insurance for employees who work for agencies that carry out Head Start programs, which provide school readiness programs.

The New York City Administration for Children's Services is a Head Start grantee. Each year DC 1707 negotiates a contract with an insurance provider for hospitalization insurance, and it sends monthly invoices to ACS for reimbursement.

ACS then pays the insurance premiums using Head Start grant money. DC1707 violated the False Claims Act as well as common law when it submitted invoices to ACS for amounts higher than what it actually paid the insurer.

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