Christina Spicer  |  February 21, 2017

Category: Consumer News

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image of Stericycle logoThe class in the multidistrict litigation alleging that medical waste disposal company Stericycle fraudulently charged customers using its subscription service was certified by an Illinois federal judge.

Lead plaintiffs alleged that they had been hit with extra charges from Stericycle for the removal of medical waste using a subscription service where they paid a fixed fee for the service. According to the plaintiffs, customers that produced only a small quantity of medical waste signed a standard service agreement that included a provision allowing Stericycle to raise rates to account for operational changes or changes in law; however, the plaintiffs allege that Stericycle arbitrarily raised rates without providing notice or explanation.

Judge Milton I. Shadur agreed to certify the proposed class noting “[i]n short, based on plaintiffs’ pleadings there is enough to establish a uniform scheme by Stericycle with common addressable questions applicable to the entire class,” in his February 16 order.

Judge Shadur also considered the admissibility of expert testimony about damages by the two class action litigants. The judge also noted the “a troubling disagreement over basic facts such as the existence of contracts,” in the class action.

Stericycle was hit with whistleblower claims that it was overcharging for services to government agencies. Those claims were settled to the tune $28.5 million. A similar case in New York was settled in $2.4 million.

The class actions initiated by small quantity customers was consolidated into the present multidistrict litigation. Small quantity customers make up 63 percent of the medical waste company’s revenue say the plaintiffs and the plaintiffs seek to represent a class of small quantity customers who signed contacts with Stericycle starting in May of 2003.

The plaintiffs are alleging $608 million in overcharges as a result of supposedly “automated price increases” and “undisclosed fees.”

Stericycle had said the class action lawsuit should not be certified because each small quantity customer signed slightly different contract with the company; however, the judge pointed out that the clause at issue for the alleged fraudulent charges is contained in most of Stericycle’s contracts.

“Any differences among some of its contracts to which Stericycle points either are inconsequential or are outliers that will eliminate some individual members from the class,” noted the judge. “Any argument that those smaller customers all negotiate contracts that result in significant differences goes against the weight of the evidence,” he continued.

Stericycle is facing legal action on a front separate from the class action lawsuits. A set of pension funds is alleging that Stericycle mislead investors using the allegedly fraudulent charges. According to the pension funds, Stericycle’s stock price fell once its customers caught wind of the alleged fraud and left.

The plaintiffs are represented by Jeffrey T. Sprung, Garth D. Wojtanowicz and Elizabeth A. Fegan of Hagens Berman Sobol Shapiro LLP and Joseph G. Sauder and Matthew D. Schelkopf of McCuneWright LLP.

The Stericycle Fraudulent Charges Class Action Lawsuit is In Re: Stericycle Inc. Steri-Safe Contract Litigation, Case No. 12-c-5795 in the United States District Court for the Northern District of Illinois.

UPDATE: A $295M Stericycle settlement was granted preliminary approval on October 26, 2017, ending four years’ worth of litigation.

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