Hagens Berman: Court Preliminarily Approves $295 Million Settlement in Stericycle Class Action over Alleged Overbilling Scheme

Settlement brings relief to nationwide class of dentists, medical clinics, veterinary clinics and other small businesses and will end Stericycle's challenged pricing practices

A $295 million settlement has been reached on behalf of a nationwide class of Stericycle SRCL customers, following a class-action lawsuit accusing Stericycle of engaging in a price-increasing scheme that automatically inflated customers' bills up to 18 percent biannually, according to Hagens Berman. Today, the court granted preliminary approval, pushing the settlement closer to final approval and implementation.

The court praised the settlement and Hagens Berman's representation of the class, stating the comprehensive settlement submissions were "reflecting professionalism of the highest order," and added that they have demonstrated "the type of high quality work product this Court anticipated when it designated Hagens Berman and its lead partner Steve Berman as Class Counsel."

Under the settlement agreement, Stericycle will also discontinue the pricing practices at the core of the lawsuit within 60 days of preliminary approval by the court. Stericycle'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."

In its preliminary approval order, the court also stated, "…in every instance the Settlement Agreement is clearly entitled to preliminary approval, with all relevant considerations having been anticipated by the parties and dealt with in totally responsible fashion."

The settlement agreement affects Stericycle customers that had flat-fee "Steri-Safe" or variable "transactional" medical waste disposal contracts with Stericycle 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 Stericycle's customer service representatives. According to the suit, those accounts made up 97 percent of Stericycle's customers worldwide.

"Our firm received countless calls and emails from frantic Stericycle customers who had nowhere else to turn to after Stericycle stiff-armed their complaints – dentists, veterinarians and accountants who were shocked over seemingly endless increasing charges," added Garth Wojtanowicz, who, with Berman, led the case against Stericycle for Hagens Berman.

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.

Find out more about the class-action lawsuit against Stericycle.

About Hagens Berman

Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with 11 offices across the country. The firm has been named to the National Law Journal's Plaintiffs' Hot List eight times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.

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