Spacelabs Pays $2.5 Million for Ignoring the VA’s Price-Reductions Clause

Spacelabs settled False Claims Act allegations that from 2014 to 2019 it failed to pass along lower prices its VA contract required — overcharging VA and DoD for patient monitoring equipment. Two former employees blew the whistle.

Spacelabs Healthcare agreed to pay $2.5 million to resolve False Claims Act allegations that it overcharged the United States for patient monitoring equipment sold to the Department of Veterans Affairs and the Department of Defense.

The settlement resolves allegations that from 2014 to 2019 Spacelabs failed to follow the Price Reductions Clause in its VA contract, which required it to pass along certain lower prices offered to another customer — so the government paid more than it should have. A related clause in a Defense Logistics Agency contract was allegedly ignored the same way.

The case began as a qui tam whistleblower suit by two former Spacelabs employees, Marci Gebhardt and Christopher Kelley, who received $437,500 of the recovery. The VA Office of Inspector General assisted the Justice Department's Civil Division and the U.S. Attorney's Office for the District of Columbia. The settlement does not state a VA-only dollar share.

"We will ensure that the government gets the prices it bargained for"
— U.S. Department of Justice, Office of Public Affairs

Source: U.S. Department of Justice, Office of Public Affairs. Case file in the VA Fraud case files — part of the VA Fraud record. Cases are published as the courts decided them; amounts are stated as the Justice Department states them (billed, stolen, or ordered in restitution, as labeled).