News and Press Releases

Educational testing service pays $1.4 million to settle allegations of improper billing

May 25, 2011


TRENTON, N.J. – U.S. Attorney Paul J. Fishman announced today that Educational Testing Service (“ETS”), a nonprofit corporation headquartered in Princeton, N.J., has paid $1.4 million to resolve allegations that it improperly billed the U.S. Department of Education on government contracts.

ETS provides assessment and research-related services to the Department of Education (ED) under government contracts. Under those contracts, ED reimburses ETS for costs of performance, including allowable medical benefits costs. In the 1990s, ETS established a retiree medical trust. During the years that ETS funded the trust, it was permitted to charge ED for retiree medical benefit costs. After ETS stopped funding the trust in 1999, the government asserts that government contracting rules prohibited ETS from including those costs in its invoices to ED. The settlement announced today resolves allegations that ETS violated those rules by continuing to bill ED for retiree medical benefit costs after ETS stopped funding the retiree medical trust.

ETS disclosed the improper charges to ED in 2007, reimbursed ED, with interest, in the amount of the alleged overcharges, and cooperated with the government’s investigation. The $1.4 million settlement agreed to by ETS is in addition to nearly $3.2 million in reimbursement and interest payments.

U.S. Attorney Fishman credited special agents of the New York Office of the Department of Education’s Office of Inspector General (OIG), under the direction of Brian Hickey, Special Agent in Charge of the Northeast Region, for their investigation of the matter.

U.S. Attorney Fishman stated: “It is our job to protect taxpayers from contractors who charge more than they should. Companies who cooperate with the government make it easier for everyone involved to ensure the American people get a fair deal.”

“This case demonstrates the importance of contract monitoring, said Kathleen Tighe, Inspector General of the U.S. Department of Education. “It also exemplifies the value of OIG in auditing and investigating government contracts and recovering money obtained pursuant to improper billing.”

The government is represented by Assistant U.S. Attorneys J. Andrew Ruymann and Mark C. Orlowski of the U.S. Attorney’s Office Civil Division in Trenton.


Counsel for ETS: Bruce M. Berman Esq., Washington

ETS Settlement Agreement

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