A $295 million settlement has been reached on behalf of a nationwide class of Stericycle customers, following a class-action lawsuit accusing the company of engaging in a price-increasing scheme that automatically inflated customers’ bills up to 18 percent biannually, according to Hagens Berman class-action attorneys. The court granted preliminary approval, moving closer to final approval and implementation.
Under the settlement agreement, Stericycle also will discontinue the pricing practices at the core of the lawsuit within 60 days of preliminary approval by the court. The company’s compliance with the settlement terms will be monitored for three years by a retired federal district judge.
“For years, Stericycle got away with a pricing scheme that boosted the bills of its customers, violating contracts and threatening the existence of small businesses paying for Stericycle’s services,” said Steve Berman, managing partner of Hagens Berman. “We’re incredibly pleased to bring both immediate financial relief and an end to this fraudulent billing practice to Stericycle’s customers who have been plagued by inflated bills for so long.”
The settlement agreement affects Stericycle customers that had flat-fee Steri-Safe or variable “transactional” medical waste disposal contracts with the company and were subjected to the disputed price increases, which the lawsuit states were as much as 18 percent, twice per year. These small businesses affected by the price increases were identified by Stericycle as “Small Quantity” or “SQ” customers. When these SQ customers called to complain about the price increases, the lawsuit says, they were given false reasons for the price increases by the company’s customer service representatives. According to the suit, those accounts made up 97 percent of Stericycle’s customers worldwide.
In 2013, an investigation of Stericycle’s billing software found Steri-Safe customers’ price increases were programmed to occur regularly as often as every six months, which plaintiffs alleged was contrary to contract terms that Stericycle had agreed to.
The contracts state that increases can occur only when “operational changes” are implemented “to comply with documented changes in the law” or to “address cost escalation.” According to the complaint, Stericycle’s billing software automatically boosted customers’ rates, regardless of any actual increases in Stericycle’s costs.
The parties will now seek the court’s approval of the settlement agreement. The fairness hearing for final approval is scheduled for Feb. 21, 2018.