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Tuesday, July 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Billing Fraud Claims to Cost Software Firm $11M

CHICAGO (CN) - CA Technologies will pay $11 million to settle claims that it fraudulently billed hundreds of public agencies for software-maintenance renewal contracts.

Whistle-blower Ann-Marie Shaw brought the allegations in a 2006 against her former employer based in Islandia, N.Y.

The federal complaint filed in Central Islip alleged that the Fortune 500 company violated the federal False Claims Act and similar state and local statutes when it defrauded its government customers, including the Illinois State Police, federal agencies such as the U.S. State Department and the U.S. Department of Justice, and the National Gallery of Art.

"CA Technologies customers who purchased maintenance renewal plans for its software licenses were entitled to free upgrades, resolutions for glitches and web-based technical support for terms of one to three years," the Illinois Attorney General Lisa Madigan's office said in a statement. "Prior to the expiration of a maintenance plan, the company would alert customers to renew their plans and avoid lapses in these services.

"However, when a customer did renew, the lawsuit alleged, instead of starting the renewal date at the end of the current plan, CA Technologies set the renewal period to begin on the day it processed the renewal order. In effect, it was alleged, customers paid twice for maintenance services in the period between ordering a renewal and the actual end of the current plan for which they already had paid.

Shaw also took aim at a blanket purchase agreement CA Technologies had with the Department of Defense for prepaid software.

She said "the company steered Defense Department customers away from ordering software from inventory the department already had paid for and convinced them unwittingly to spend more money to buy the same products through third-party vendors," as summarized by Madigan's office.

Madigan announced the $11 million settlement Tuesday.

Federal prosecutors in New York "spearheaded the federal and multi-state legal action with assistance from the Office of the Inspector General of the U.S. General Services Administration and the Defense Criminal Investigative Service of the Department of Defense," the statement continues.

The offices of Madigan and the New York attorney general helped negotiate settlements with eight states, the District of Columbia and hundreds of local government entities.

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