A federal judge has been asked to sign off on a $295 million settlement deal, intended to end a multi-state class action lawsuit accusing medical waste disposal company Stericycle of fixing prices for its “small quantity” customers under an automatic price increase policy, allegedly costing them hundreds of millions of dollars.

On Oct. 17, attorneys for a certified class of plaintiffs from throughout the U.S. filed a motion with U.S. District Judge Milton I. Shadur in Chicago, asking the judge to approve the purported deal with Lake Forest-based Stericycle. The class was led by named plaintiffs Lyndon Veterinary Clinic PLLC; ResearchDX LLC; Cochranton Veterinary Hospital; Amores Dental Care; McMackin & Simnoch P.C.; Madison Avenue Professional Building; and Greater Hampstead Family Medicine P.C.

The class was represented by attorneys Steve Berman, Garth D. Wojtanowicz and Elizabeth A. Fegan, of the firm of Hagens Berman Sobol Shapiro LLP.

Under the terms of the deal, attorneys could be in line to receive up to $40 million in fees, or about 13.5 percent of the total settlement fund. They could receive an additional $2.8 million in reimbursements for purported costs associated with the litigation.

According to a memorandum submitted to explain the settlement, the “average class member” could be in line for payments of at least $900 each.

In all, the memorandum said the deal would recover as much as 32 percent of the total amount plaintiffs estimated the class members had lost to Stericycle’s alleged practices.

Shadur had certified the class in a ruling in February, more than a year after the Hagens Berman firm had requested class certification in the litigation, which, in turn, came about three years after the firm filed suit in Chicago federal court in April 2013 against Stericycle on behalf of the Lyndon Veterinary Clinic in Fayetteville, N.Y.

Other similar class action lawsuits were filed in Chicago, Southern California and Western Pennsylvania, leveling similar allegations and claims. A federal judicial panel then consolidated the cases into a single “multi-district litigation,” and assigned the matter to Judge Shadur in August 2013.

The complaints centered on annual price increases Stericycle handed to its smaller customers. The company collects and disposes of medical waste from jails, clinics, laboratories and other businesses. But according to the lawsuits, Stericycle violated “contracts by using an automated price increase to increase charges arbitrarily to ‘small-quantity’ customers without any notice or explanation,” while assessing “’undisclosed fees’ that were hidden increases buried in invoices.” Plaintiffs claimed Stericycle targeted its smaller customers to avoid wrangling over prices with larger institutional customers, with more resources to fight the price hikes.

In its complaint, for instance, Lyndon Veterinary accused Stericycle of hiking its prices by about 21 percent a year from 2009-2012.

Other plaintiffs asserted similar unfair, steep price hikes.

Plaintiffs alleged the automatic price increases had cost them at least $608 million. An expert witness for the plaintiffs identified 256,000 Stericycle customers who had suffered such price increases, and could be included in the class.

The judge has not yet ruled on the settlement agreement.

Stericycle is represented in the action by attorneys with the firms of Duane Morris LLP, of Chicago, and Parsons Behle & Latimer, of Salt Lake City.

   

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Hagens Berman Sobol Shapiro, LLP U.S. District Court for the Northern District of Illinois

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