ICP Medical: Settling Allegations Over Reboxed Medical Supplies and False VA Origin Claims

ICP Medical paid $4 million to resolve allegations over reboxed medical supplies and false VA origin claims, together with false pricing disclosures to the Department of Veterans Affairs and the Department of Defense. The government alleged that Chinese medical products lost their origin labels before delivery, while inaccurate discount disclosures left federal buyers paying inflated prices. If you worked with the boxes or the commercial sales records, you may recognize a part of the transaction that the government customer never saw.

The contractor, based in Earth City, Missouri, sold medical goods to those federal buyers. The U.S. Attorney’s Office for the Eastern District of Missouri announced the settlement on January 10, 2017.

The Prices the Government Was Supposed to Receive

ICP allegedly made false disclosures to the agencies about the discounts and prices other customers received for surgical gowns, sheets and scrubs. The government said those disclosures resulted in prices higher than the agencies should have paid.

That is the commercial point behind false commercial sales practices disclosures. A government buyer negotiating against a seller’s account of its commercial business needs to know the concessions customers actually receive. A published price list can leave out the discounts that determine what customers really pay.

The commercial sales practices format asked for actual discounts and concessions, including departures from written sales policies. A sales team could know about a concession that never appeared in the standard price list. We compare the commercial sale with the pricing promise in the contract, the disclosure supplied to the government and the price it was billed.

For someone in sales or accounting, the useful detail may be an exception routinely approved for commercial buyers, or a concession missing from the account given to the agency. The question we pursue is what the seller knew about its real prices when it described them to the government. In ICP’s case, the alleged result was an inflated bill for ordinary medical supplies. The alleged overcharge took money from the agencies buying medical supplies for veterans and service members.

The Boxes That Carried the Origin Claim

The government alleged that ICP obtained body bags, gowns and scrubs from China, removed the “Made in China” designations from their packaging, put the products in new boxes and added U.S. flag stickers to some packages. These changes allegedly took place before shipment to Department of Veterans Affairs and Department of Defense facilities.

The settlement also resolved allegations that ICP falsely described the products’ country of origin and sold goods from countries the Trade Agreements Act did not permit for those purchases. The alleged conduct reached beyond a statement in a sales file. According to the government, it changed what the customer would see on the package.

We find the alleged flag stickers telling. A flag on a replacement box cannot do the work of a factory.

Trade Agreements Act origin requirements follow the product and the contract. For covered purchases, the Trade Agreements clause addresses U.S.-made and designated-country products. The manufacturing history is what we examine alongside the origin claim on the government order.

The Buy American rules use a different origin test. In ICP’s case, the government specifically identified the Trade Agreements Act. We follow the origin promise attached to the purchase, rather than treating every domestic-purchasing claim as the same promise.

In ICP’s alleged scheme, packaging offered a direct comparison. Someone who saw the products arrive with Chinese-origin markings and leave in different boxes could explain a change that the final shipping paperwork might conceal. The incoming package, the replacement packaging and the government order belong in the same account.

Medtronic’s Medical Devices Carried a Similar Origin Promise

Medtronic’s medical-device settlement involved allegations that products certified as originating in the United States or designated countries were manufactured in China and Malaysia. The products included cardiac-lead anchoring sleeves, spine instruments and a handheld patient assistant. Purchases by the Department of Veterans Affairs and the Department of Defense were both involved.

The connection is the origin representation attached to the product the agency bought. The allegations against Medtronic concerned manufacture and certification. Those against ICP also described the physical removal of origin labels. For a medical-supply insider, that puts warehouse handling alongside the factory and the government sales file as places where the discrepancy may be visible.

What Proof Do You Need as a Whistleblower?

For a medical-supply pricing and origin case, the useful proof connects what the company told the government with its commercial transactions and the goods it supplied. We examine those connections with you: the contract’s pricing and origin promises, the records that contradict them, the government purchase and who knew about the difference.

Commercial invoices and rebates can show the prices customers actually received. Manufacturer records and packaging history can show where products came from and how they were presented. These are the records that test a government charge, and we assess them with you.

A sales employee may understand the customer discount. A purchasing employee may know the supplier. A warehouse employee may have seen the markings removed. Connecting that knowledge to what the government bought is the work we do with you.

The price and origin questions need to meet at the product and order. That is where we can compare what the government paid for with what the contractor’s own business records describe, and identify the decisions behind the difference.

The Former Employee’s Case Reached Both Federal Buyers

A former ICP Medical employee brought the qui tam case under the False Claims Act in federal court in St. Louis.

The Offices of Inspector General for the Department of Veterans Affairs, the Department of Defense and the General Services Administration investigated the allegations.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For an insider with knowledge of false prices or origin claims, we build the case with you and pursue a share of the government’s recovery.

You Saw What the Buyer Could Not

If you knew the real discounts, handled the replacement boxes or saw origin claims that did not match the goods, speak to one of our whistleblower experts about how the government was overcharged or misled. We stay with you through the whole case, build your strongest government procurement whistleblower case around those transactions, and bring in government procurement whistleblower lawyers who know pricing and country-of-origin claims.