Iron Mountain Inc., a Boston company that offers data storage and management services, has agreed to pay $800,000 to settle a whistle-blower lawsuit that alleged that it had failed to shred documents according to government standards, the US Attorney’s Office for the Eastern District of Pennsylvania said Tuesday.
In a statement, Iron Mountain said, “We settled this suit to avoid the cost and distraction of litigation.”
Also involved in the lawsuit was Shred-It Inc.
The lawsuit alleged that the two companies contracted with the government to provide shredding services but did not cut the government’s documents to the size required under standards established by the General Services Administration.
In a statement, US Attorney Zane David Memeger said that Iron Mountain will pay $800,000 to the government, plus attorneys’ fees, and that Shred-It will pay $300,000 to the government, plus attorneys’ fees.
The case was originally filed under the False Claims Act by Douglas Knisely, who operates a paper shredding business in Lock Haven, Penn., according to a press release issued by Memeger. The False Claims Act permits ordinary citizens, who are known as “relators,” to bring lawsuits in the name of the United States alleging fraud against the government. The relator is entitled to a portion of the settlement.
In its statement, Iron Mountain said: “A small competitor brought this suit against three major shredding providers claiming they did not meet US government specifications for shredding federal documents. The General Services Administration (GSA) contract once required government documents to be shredded to a size unattainable by most commercial shredding services. The GSA has since changed the specification to conform with our industry’s standards. The US government continues to use Iron Mountain for shredding services today. We settled this suit to avoid the cost and distraction of litigation.”
In court papers, Shred-It said it “expressly denies the claims in the civil action and expressly denies that it engaged in any wrongdoing.”