Alleged Over Pricing Leads to Largest-Ever False Claims Act Settlement

Software giant Oracle entered into the largest-ever settlement in the history of the False Claims Act in October 2011, agreeing to pay $199.5 million to resolve accusations that the company overcharged the federal government.

The settlement stems from allegations that the company withheld information about its commercial sales practices when negotiating prices with the federal government. As a result, the company was providing its commercial customers with bigger discounts than it offered through its contract with the U.S. General Services Administration.

The whistleblower who brought this practice to light was a contract specialist who had worked for Oracle for the previous ten years. The False Claims Act case he filed in May 2007 provided details of company handbooks, memos, and training that described Oracle’s obligations under the government contract as well as evidence that some company employees rationalized that they did not need to notify the government of such commercial discounts. The whistleblower is reported to receive $40 million for bringing the company’s wrongdoing to the government’s attention.

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