Stericycle customers in Utah, other states cry foul in lawsuits
Some of its customers say medical waste is not the only thing Stericycle Inc. is burning these days.
The Illinois-based waste handler, which operates a controversial incinerator in North Salt Lake, is charging excessive fees without the customers' consent or even knowledge, according to proposed class-action lawsuits filed in Utah and four other states.
The Hair Restoration Center of Utah, located in Cottonwood Heights, signed a fixed-price contract with Stericycle in May 2010, agreeing to pay $152 a month for disposal of a single medium-size container. But from the beginning, the hair center's operators, Michael and Trudy Zufelt, were charged higher amounts that weren't related to any additional costs, according to the suit they filed in August in federal court.
By 2011, the charge reached $187.76 a month. It kept increasing until June 2013, when they were billed $384.60, the suit said, more than double what the Zufelts agreed to pay barely two years before for the same level of service.
The hair center filed suit in August on behalf of itself and proposing to represent others "similarly situated," seeking $5 million for breach of contract and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Similar suits have been filed in Pennsylvania, California, Florida and Illinois, according to Stericycle's filings with the Securities and Exchange Commission. The suits arose after the state of New York settled whistleblower allegations against Stericycle brought by a former employee.
The employee, Jennifer Perez, said she witnessed Stericycle "routinely adding undisclosed charges to its customers' bills" and without justification.
Since its founding in 1989, Stericycle has come to dominate the medical waste market through acquisitions. It now has 522,000 customers worldwide. The majority are dental offices and outpatient clinics such as the Hair Restoration Center of Utah.
"Because of Stericycle's ongoing acquisitions, customers and potential customers had very few options for alternative waste removal companies," the hair center's suit states. "Stericycle does not inform customers that, despite the original contract agreement, it will automatically add unauthorized fees and surcharges to each invoice."
The company has also come under increasing fire for incinerating waste, which releases dioxins, furans and mercury. Utah regulators have recently accused the company of exceeding pollution limits specified in its permit, rigging a stack test and failing to accurately report test results. The company is fighting those allegations, while public health advocates and community activists are calling for the plant's shutdown.
Stericycle did not respond to a message left at its corporate communications office. In SEC filings, however, company officials promised investors they would "vigorously" defend against the class-action lawsuits.
"We believe that we have operated in accordance with the terms of our customer contracts and that these complaints are without merit," officials wrote in one recent filing.
That's pretty much what the company told the Zufelts when they complained about excessive charges in June. The contract allows Stericycle to "adjust" charges in response to fuel prices, regulatory changes and other factors that push up its costs.
Trudy Zufelt asked to cancel the hair center's contract, the suit said, but the company informed her that it had been automatically renewed for two years and that the Zufelts would be liable for the remaining value of the contract, according to her suit.
However, the company had pledged not to hold customers to long-term contracts as part of a 2003 settlement with the states of Arizona and Utah over alleged anti-trust violations.
The states had sued Stericycle and BFI Waste Systems for allegedly colluding to divide service territories for the sake of suppressing competition. In a 1997 arrangement, BFI and Stericycle conspired to divide existing and future customers, equipment, and even employees, according to claims in court filings. The alleged purpose was to unlawfully restrain fair trade and monopolize the medical waste market in Utah, Arizona and Colorado.
Stericycle in 1999 bought out BFI's medical waste assets, acquiring the North Salt Lake incinerator among other facilities.
The Zufelts tried to remind the company by e-mail of its legal obligations under the anti-trust settlement. Stericycle never responded, the suit said, but it soon canceled their contract.
The courts have transferred the various class-action suits to a federal court in Illinois, which will coordinate the litigation.