CHICAGO — An Illinois federal judge has, in a preliminary approval, gave the go-ahead on a $295 million settlement for a class of Stericycle customers in an alleged overcharging scheme.
According to Legal Newsline, the medical waste disposal company, Stericycle violated contracts with its customers. Customers and their class action attorney alleged in federal court that the company had defrauded them to the tune of hundreds of millions of dollars in some sort of automated price-increasing plot.
A consumer-rights class action law firm called Hagens Berman Sobol Shapiro LLP is representing the class of consumers. According to the report, the company was allegedly engaged in automatically boosting up customers’ bills by up to 18 percent biannually.
The presiding judge in the case was Senior Judge Milton I. Shadur for the U.S. District Court for the Northern District of Illinois, Eastern Division. As part of the settlement agreement in the Stericycle case, the company must discontinue these pricing practices alleged in the suit within 60 days of the preliminary approval by the court. A retired federal judge will monitor the company’s compliance for a period of three years. Many of Stericycle’s customers were small business owners and the class action attorneys at Hagens Berman said the company has been getting away with these practices until the suit was filed, which should bring at least some relief to those businesses whose enterprises were threatened by the violated contracts.
The order provides that maximum fees that can be awarded to the Hagens Berman team may amount to $40 million combined with out-of-pocket expenses not to exceed $2.8 million. In other words, the attorneys can pocket almost 14 percent of the total $295 million settlement amount for their work on the case. The judge wrote that fees in other class action cases ranged from 30 to 33 percent (roughly one-third) and viewed the 13.6 percent figure to be most favorable in this case.
Stericycle customers complained about flat-fee and variable rate fee medical waste disposal contracts they had with the company and called customer service to complain about price increases. Customer service representatives allegedly gave false reasons for the price increases, according to reports. The lawsuit stated that these customers represented up to 97 percent of the company’s worldwide business. A 2013 investigation revealed that the company’s billing software was programmed to inflate the charges as regularly as every six months, not stated in the terms of their customer contracts. The contracts only allowed for increases when operations costs or other costs of doing business escalated, however the complaint alleges the software automated the process with no regard to any business cost analysis.
The case is Lyndon Veterinary Clinic v. Stericycle, and it was consolidated with other similar cases by a cout panel in August 2013. A fairness hearing for final approval is scheduled for Feb. 21, 2018, according to a news release from the American Dental Association (ADA). According to a BusinessWire report, the law firm representing the class has 11 offices across the country.
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