American Airlines to Pay $22 Million to Resolve False Claims Allegations

It doesn't matter how big or small the company, contract fraud happens.

The U.S. Postal Service (USPS) contracts with commercial airlines for the safeguarding and timely delivery of U.S. Mail to foreign posts, including the mail sent to deployed military. American Airlines is one of those USPS contractors. USPS contracted with American Airlines to "take possession of receptacles of United States mail at six locations in the United States or at various Department of Defense and State Department locations abroad, and then deliver that mail to numerous international and domestic destinations."

To receive payment under the contract, American Airlines was required to submit electronic scans of the mail receptacles to USPS reporting the time the mail was delivered at the specified destinations. If the mail was delivered late or delivered to the wrong location, American Airlines would be penalized.

Yesterday, the Justice Department announced a settlement to a long-running investigation into American Airlines performance under the contract. The USPS's Office of Inspector General's (OIG) investigation disclosed widespread falsification of the dates and times that American Airlines said that it transferred possession of US Mail to intended recipients. Based on this investigation, the Justice Department charged American Airlines with fraud under the False Claims Act.

Under the terms of the settlement, American Airlines agreed to pay $22.1 million to resolve its alleged liability under the False Claims Act. The Government's claims are allegations only, and there has been no determination of liability.