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Posted at 04:08 PM ET, 05/04/2011

FedEx pays government $8M to settle whistleblower lawsuit

FedEx will pay the federal government $8 million to settle a whisteblower’s lawsuit that claimed the company’s couriers blamed heightened security measures for late deliveries to avoid paying penalties for missing shipping deadlines.

The agreement was unsealed Tuesday in U.S. District Court for the District of Columbia. The lawsuit alleged the practice began in the wake of the 2001 terrorist attacks but continued through this year after beefed-up security had subsided or become routine and not an unpredictable hurdle.

FedEx denied the government’s allegations that couriers handling shipments for federal offices invoked security delays to mask late arrivals after they had become stuck in traffic, couldn’t find parking or were tardy on relays of packages.

FedEx officials also denied that their workers cited a security delay exception rather than honor money-back guarantees in contracts with federal customers when deliveries were late.

To avoid “continued litigation and its associated risks” FedEx and the government agreed to the settlement, court records show.

The suit was originally brought under the federal False Claims Act by whistleblower Mary Garofolo, 58, of Crofton who worked for FedEx at its station in Crofton.

Garofolo will receive $1.44 million as her share of the money the government is due to recover.

Garofolo retired from FedEx in 2007.

“I would give them 2001 as being a year when security was an issue for deliveries,” said Garofolo in an interview Wednesday. “But it went on for years and got to the point it was really off the chain using that as their explanation when customers would call and complain.”

This item has been updated since it was first published.

By  |  04:08 PM ET, 05/04/2011

Categories:  From the Courthouse, Mary Pat Flaherty, The District

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