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YRC Freight, Others Ask Court To Dump Government Suit Over Alleged DoD Overcharges


DOJ has no case on alleged overcharges, YRC, Yellow, Roadway say (Photo:Jim Allen/FreightWaves)

DOJ has no case on alleged overcharges, YRC, Yellow, Roadway say (Photo:Jim Allen/FreightWaves)

The federal government has failed to support its claim that less-than-truckload (LTL) carrier YRC Freight, as well as Yellow Transportation and Roadway Express deliberately overcharged the U.S. Department of Defense (DoD) over a seven-year period. According to the carriers, the government continued to do business with them even though it understood the policies at the heart of the dispute, they said in asking a federal district court to dismiss the government's case.

In the motion, filed February 12 before the United States District Court for the Western District of New York, the carriers said the U.S. Department of Justice (DOJ), which brought the suit in mid-December, failed to provide specific facts to back up its claim that the carriers inflated the weights of DoD shipments in order to overbill the agency, and then covered up their misdeeds. DOJ also was unable to show that the alleged misconduct played a role in the Pentagon's decision to pay the carriers.

In fact, the government continued to accept tenders from, and make payments to, the carriers even though it had full knowledge of their policies toward "negative re-weighs," according to the carriers. It is standard practice for LTL carriers to reweigh shipments so they match the weight and dimensions shown in the corresponding bills of lading. Reweighs can result either in refunds to the shipper for carrier overcharges, or additional bills from the carrier for an underweight or undersized shipments.

A government spokeswoman declined to comment on the motion.

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From 2008 when an individual named James Hannum filed a complaint under the whistleblower provisions of the False Claims Act, until the time the suit was filed, the DoD never refused to make a payment for the full amount of any invoice, and at no time initiated the various remedies afforded to it by law based on its view that (the carriers') interpretation was erroneous, much less fraudulent," the carriers said in the filing. It is believed the pricing dispute impacts government shipments tendered to YRC and the other companies in a period prior to 2013.

In its suit, DOJ alleged that for more than seven years the carriers billed the Pentagon based on shipment weights that were higher than the actual weight of the goods. According to the suit, the carriers reweighed thousands of shipments but suppressed the results whenever they showed a shipment was lighter than its original estimated weight. The suit said the carriers "knowingly billed the government (and their other customers) based on weights that they knew to be inflated." The carriers also made false statements to induce the Pentagon to use their services, and knowingly falsified statements to "improperly avoid their obligations to correct inflated invoices and (to) return overpayments," DOJ alleged.

DoD traffic accounts for a tiny amount of YRC's overall annual revenue.

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Under the False Claims Act, private citizens can sue on behalf of the government for false claims, and can share in any recovery. The government can intervene in such lawsuits. Those who violate the act are subject to treble damages and civil penalties. It is unclear how much money is involved, but it is thought to be in the millions of dollars.

Yellow Transportation was the forerunner name of YRC Freight, which handles long-haul LTL shipments. Roadway Express was an LTL carrier that then Yellow Corp., the Yellow parent, acquired in 2003. YRC Freight is a unit of YRC Worldwide, Inc. (NASDAQ: YRCW).

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