Stericycle Wraps Up Price Increase Litigation with $295M Settlement

A federal judge has granted preliminary approval to a settlement resolving a long-fought litigation over price increases imposed by defendant Stericycle.

U.S. District Judge Milton I. Shadur granted preliminary approval of the proposed Stericycle class action settlement on Oct. 26. The settlement wraps up four years’ worth of litigation over price increases that Stericycle charged its customers for medical waste disposal services.

Under terms of the settlement, Stericycle will contribute a settlement fund worth $295 million. After payment of attorney fees, court costs, and service awards for named plaintiffs, the average Class Member is expected to receive around $930. Some may receive payments in the tens of thousands of dollars, according to the plaintiffs’ motion for preliminary approval.

Payments will be calculated and mailed to known Class Members based on the information in Stericycle’s own records. No claims process will be required to distribute payments, according to the motion for preliminary approval.

The settlement also requires Stericycle to change some of its business practices. Starting 60 days after the grant of preliminary approval, price increases for existing Stericycle customers will be capped at 6% annually. New contracts will be subject to an 8% cap.

A retired federal judge will monitor Stericycle’s compliance with the settlement terms over the next three years.

Judge Shadur praised the work of plaintiff’s counsel Hagens Berman Sobol Shapiro LLP and its lead partner Steve Berman for producing a comprehensive and well-designed settlement, saying the firm’s work reflected “professionalism of the highest order.”

The Stericycle class action litigation was initiated in April 2013 by plaintiff Lyndon Veterinary Clinic PLLC of New York. The clinic claimed Stericycle was grossly ignoring restrictions in its own contracts with “small quantity” customers that tightly limited the circumstances under which Stericycle could raise its prices.

Under terms of those contracts, small quantity customers expected to pay a fixed fee for medical waste disposal services. The contracts allowed Stericycle to increase fees only to account for increases in operational costs or changes in legal requirements.

But plaintiffs claimed Stericycle raised its fees on them substantially, frequently, and without explanation. According to the motion for preliminary approval, some customers were hit with 18% price increases twice in a single year. Total overcharges amounted to $608 million, according to the plaintiffs.

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As approved by the court, the settlement Class will cover all persons who between March 8, 2003 and the date of preliminary approval were identified by Stericycle as a small quantity customer and who were charged and paid more than their contractually-agreed price for Stericycle’s goods and services.

The plaintiff Class is represented by attorneys Steve W. Berman, Garth D. Wojtanowicz and Elizabeth A. Fegan of Hagens Berman Sobol Shapiro LLP.

The Stericycle Fraudulent Charges Class Action Lawsuit is In Re: Stericycle Inc. Steri-Safe Contract Litigation, MDL No. 2455, in the United States District Court for the Northern District of Illinois.