Spacelabs Healthcare has agreed to pay $2.5 million to resolve False Claims Act allegations that it overcharged the U.S. for patient monitoring equipment sold to the U.S. Department of Veterans Affairs (VA) and the Department of Defense.

“Those who do business with the United States must comply with their contractual commitments,” says Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will ensure that the government gets the prices it bargained for when it cares for the health of our veterans and service members.”

The settlement resolves allegations that from 2014 to 2019, Spacelabs failed to follow the Price Reductions Clause in a VA contract, which required Spacelabs to provide the government with certain lower prices offered to another customer, resulting in the government paying more than it should have for patient monitoring equipment. The settlement also resolves allegations that Spacelabs failed to follow a related clause in a Defense Logistics Agency contract.

“Federal contractors are expected to deal honestly with federal agencies and faithfully abide by the terms of their government contracts,” says U.S. Attorney Matthew M. Graves for the District of Columbia. “This settlement demonstrates that our Office will diligently investigate and hold accountable those companies that fail to live up to their end of the bargain and unfairly overcharge taxpayers.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Marci Gebhardt, a former Spacelabs government business specialist, and Christopher Kelley, a former Spacelabs government accounts manager.

“This settlement sends a clear message that the VA OIG will actively investigate allegations involving contractors overbilling for products provided to VA,” says Special Agent in Charge Kim R. Lampkins of the Department of Veterans Affairs Office of Inspector General’s Mid-Atlantic Field Office. “The VA OIG will continue to work with the Department of Justice and our law enforcement partners to ensure the integrity of VA programs and services.”

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorney’s Office for the District of Columbia, with assistance from the VA OIG.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.