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MILBERG LLP > Milberg LLP Announces Its Investigation of Sodexo

Milberg LLP Announces Its Investigation of Sodexo

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The law firm of Milberg LLP is investigating a possible lawsuit against food distributor Sodexo.  The Company was recently accused by the New York Attorney General of inflating prices by failing to pass on rebates which Sodexo receives from food suppliers.  Sodexo provides food to many cafeterias nationwide, including those in schools, hospitals, and retirement homes.  Sodexo enters into a contract with institutions on a “cost plus” basis, but receives rebates from suppliers which in reality lowers its cost.  The lower cost is not passed on to the institutions and this practice may violate the contract and, in some cases, federal laws.

Nonprofit news organization, In These Times, published an article on March 3, 2009, examining rebates that Sodexo receives from its food suppliers.   The article, entitled Cafeteria Kickbacks, explains that Sodexo enters into contracts with entities, such as government organizations, private companies, schools, hospitals, and universities, to provide cafeteria services.  Contracts with federally-run entities utilize a cost structure based on the supplier’s price plus a fee set by Sodexo.  According to the article, Sodexo collects rebates or “kickbacks” as a way to maximize its own profits. In some cases, such rebates violate the contracting policies of federal agencies. In others, undisclosed rebates may constitute fraud, according to the article.

Jim Sheehan, New York State’s Medicaid Inspector General, told the publication that the rebates may  violate the Medicare-Medicaid Anti-Kickback Act.  Sheehan explained that no vendor can give “anything of value in whole or part in cash or kind in return for referral of service paid for by government.”  A company like Sodexo “can get a discount,” says Sheehan, “so long as it’s accurately reported on the cost report.”  But “a secret rebate would not meet that standard.”

If you are interested in our Sodexo investigation, and wish to talk to a lawyer from Milberg LLP about this, at no obligation to you, please fill out the form to the right.

Milberg LLP has been representing consumers and investors for more than four decades and serves as lead counsel in federal and state courts throughout the United States.  Please visit the Milberg website for more information about the Firm.  If you wish to discuss this matter with us, or have any questions concerning your rights and interests with regard to this matter, please contact the following attorney:

Andrei Rado, Esq.
Milberg LLP
One Pennsylvania Plaza, 49th Fl.
New York, NY 10119-0165
Phone number: (800) 320-5081
Email: arado@milberg.com

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