Attorneys for YRC Freight Inc. have asked a federal judge to dismiss a U.S. Department of Justice civil lawsuit alleging that the company overcharged the federal government on shipments, stating that the government has failed to build a sufficient case despite years of investigation.
YRC said on Feb. 12 that the government’s claim showed it is “desperate” to find improper actions by the company.
Its legal proceeding started Dec. 12, when the government filed a lawsuit alleging that for a seven-year period through about October 2013, YRC and two of its former subsidiary motor carriers, Roadway Express and Yellow Transportation, overcharged the Department of Defense for thousands of shipments that actually were lighter, and thus cheaper, than the weights that the carrier charged the agency. The difference in charges totaled in the millions of dollars, the lawsuit claimed.
In a written statement two days after the government filed its lawsuit, YRC said the government’s claims were “without merit,” noting that the carrier had been cooperating with the government’s investigation for more than nine years.
“We are confident that the evidence will demonstrate YRC acted consistently with our contract and all applicable guidelines,” said the statement on Dec. 14.
During the years outlined in the lawsuit, the plaintiff said YRC, Roadway and Yellow’s internal policies required them to conduct weight verifications, whereby its employees, typically forklift operators, were required to weigh each shipment to determine whether the shipper’s stated weight, typed on the bill of lading, was accurate.
The government said the carriers adjusted invoices upward for heavier-than-stated shipments, but set its automated computer system so that invoices were not adjusted downward for lighter-than-stated shipments.
However, in a document published Feb. 12 in support of its motion to dismiss the case, YRC said the government “scraped the bottom of the barrel in a desperate attempt to somehow conjure up an appearance of some sort of purported business impropriety and comes up with nothing more than a few e-mails.”
The allegations of fraud first surfaced in November 2008 in a whistleblower lawsuit filed by James Hannum, who said he worked in the Roadway Express Inc. Buffalo, N.Y., office as a weight and inspections supervisor for 22 years.
But YRC complained that the government’s investigation, which came on the heels of Hannum’s complaint, took more than 10 years “following no less than a half-dozen motions for extension of time.”
It also noted that DOD during this period continued to do business with the company.
“During that decade-long period, the government, with express knowledge of the defendants’ interpretation of their obligations under the relevant rule, never refused to make a single payment to defendants for the full amount of any invoice, and at no time initiated the various remedies afforded to it by law based on its view that defendants’ interpretation was erroneous, much less fraudulent,” YRC said.
While many documents in the case have been sealed at the government’s request, its complaint outlined a trail of the carriers’ alleged overcharges to DOD’s United States Army Surface Deployment and Distribution Command. In its documents requesting dismissal, however, YRC said that nowhere in the government’s series of allegations did there exist identification of specific claims that were submitted that generated payments to the motor carriers.
“Instead, the government alleges that it provided 200 examples of the more than 13,000 claims, yet none of the information shows actual claims for payment,” YRC said.
Kathleen Lynch, the lead prosecutor in the case from the U.S. Attorney’s Office for the Western District of New York in Buffalo, did not return a phone message seeking comment Feb. 19.
A YRC spokesman said Feb. 19 there was no further comment beyond the motion for dismissal.
“There is no allegation in the complaint that in those 10 years since the [Hannum] filing, the government refused to pay the defendants’ claims or signaled a change in its position toward the full payments,” YRC said in the motion. “The reason is that the government never once refused to make a payment to any of the defendants despite its express knowledge of the weight correction process at issue.”