The Department of Justice has announced that a $6.85 million settlement was reached with three freight carriers, YRC Freight Inc. (YRC), Roadway Express Inc., and Yellow Transportation Inc. after allegations that they knowingly overcharged the government for their freight carrier services.

The original lawsuit was brought forward by a whistleblower, James Hannum. Hannum filed the complaint under the False Claims Act, which allows private citizens to bring complaints against companies or individuals when fraud is suspected. In such cases, whistleblowers are able to share in any settlement funds if one is reached.

Hannum brought forward his concerns in 2008 through a federal lawsuit. The three companies have since merged under a parent company, YRC Worldwide. In the U.S., their operations are referred to as Yellow Transportation.

According to the DOJ, the three freight carriers served the Department of Defense through government contracts which allowed them to ship military freight across the country. The allegations against the three companies explain that between September 2005 and October 2013, the three companies knowingly overbilled for their services.

The lawsuit alleges that before shipments were cleared for delivery, they were reweighed by the freight carriers. If shipments weighed over the original weight limit, the freight carriers would bill the extra weight limits. However, when shipments were less than the original weight, instead of lowering the billing costs to reflect the actual weight, the freight carriers would bill for the weight that the shipment was originally detailed as. The allegations further detail that instead of correcting the weight discrepancies, the freight carriers concealed their fraud by making false statements that reflected weight limits that were over the actual weight. Despite agreeing with the DOD that they would comply with the rules regarding weight discrepancies, the freight carriers chose to overbill instead.

Following news of the settlement, the head of the Justice Department's Civil Division, Principal Deputy Assistant Attorney General Brian M. Boynton shared, “We expect companies to do business with the government honestly and fairly.” Boynton adds, “This settlement demonstrates the department’s continuing commitment to hold accountable those who defraud the government and, by extension, the American taxpayers.”

Because the claim was brought forward by whistleblower Hannum, he is set to receive over $1.3 million as a result of the settlement. In an interview with The Buffalo News, the executive vice president of Yellow Transportation, Leah Dawson, contends that the settlement is not an admission of guilt or wrongdoing. Dawson explained, “We remain confident that we complied with the then-existing rules and our contractual obligations. While we believe we had strong defenses, we decided, in the best interests of all parties, to resolve this matter for a small fraction of the amount originally demanded."

CEO of Yellow, Darren Hawkins, also added in his own statement, “We are pleased to have come to a resolution. Now we can continue to focus on the important work ahead. With our nation’s current supply chain constraints and the critical role Yellow plays in delivering freight, there’s no time for distraction."