Sea Star Line and Horizon Lines have agreed to pay $3.4 million to resolve allegations that they violated the False Claims Act
by fixing the price of government cargo transportation contracts between the continental United States and Puerto Rico, the U.S. Department of Justice announced.
Under settlement agreements, Sea Star Line has agreed to pay $1.9 million, and Horizon Lines has agreed to pay $1.5 million.
The U.S. government alleged that former executives of the shippers used personal email accounts to communicate confidential bidding information, thereby enabling each of the shippers to know the transportation rates that its competitor intended to submit to federal agencies for specific routes. This information allowed the shippers to allocate specific routes between themselves at predetermined rates. Among the contracts affected were U.S. Postal Service contracts to transport mail and Department of Agriculture contracts to ship food. Both Sea Star Line and Horizon Lines previously pleaded guilty, in related criminal proceedings, to anti-competitive conduct in violation of the Sherman Act.
The civil settlements resolve allegations in a lawsuit filed in federal court in Jacksonville, Fla., by former Sea Star Line executive William Stallings. The lawsuit was filed under the qui tam
, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The act also allows the government to intervene and take over the action, as it did in this case. Stallings will receive $512,719 of the recovered funds.
Last month, Matson said earnings in the fourth quarter were reduced
because of a $9.95 million charge to reflect a proposed settlement in a
whistleblower lawsuit that claimed charges on government shipments between the mainland and Hawaii were too high because of improper calculation of fuel surcharges. Horizon has also been accused in that lawsuit and participated in mediation, but has not announced a settlement.
The Hawaii suit was not mentioned in Horizon's 8-K filing with the Securities and Exchange Commission about the settlement of the Puerto Rico suit
, but in November, Horizon said it had "filed responsive pleadings" in the Hawaii lawsuit and intends
to vigorously defend against the allegations set forth in the