The State of New York has reached an $18 million settlement with Compass Group USA over allegations that Compass did not pass on vendor rebates it received on school food purchases as New York State law requires. The settlement is similar to others reached by New York Attorney General Eric Schneiderman with foodservice contractors Sodexo and Whitsons. It is part of the office's ongoing, industry-wide investigation of food management companies and food distributors doing business with the state of New York.
The settlement, pursued under the state's strictly-written False Claims Act, requires Compass to repay almost $3 million to the schools while the state is expected to get about $15 million from damages and penalties. Other entities receiving compensation from the settlement include the Fresh Air Fun and the New York State School for the Deaf.
In addition to the $18 million penalty, Compass is required over the next two years to make quarterly disclosures of the settlement to all of its New York state educational customers and to provide detailed semi-annual reports of the company's New York sales and rebating practices to the AG office's Taxpayer Protection Bureau.