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 it failed to shred documents according to government standards, the US attorney’s office in Philadelphia said Tuesday.
The lawsuit alleged that Iron Mountain and a second company, Shred-it Inc., 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, Iron Mountain said, “We settled this suit to avoid the cost and distraction of litigation.”
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 the government $300,000, 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, Pa., according Memeger’s office. 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.
Iron Mountain said the government’s specifications required documents be shredded “to a size unattainable by most commercial shredding services.” It added that the GSA has since changed those requirements and that Iron Mountain continues to contract with the US government for shredding services.
In court papers, Shred-it denied the claims by Knisely and “expressly denies that it engaged in any wrongdoing.”