ETS Pays $1.4 Million to Settle Case Over Contract Billing

May 25 (Bloomberg) -- Educational Testing Service, which administers tests for students and teachers, paid $1.4 million to resolve claims that it improperly billed the U.S. Education Department on government contracts.

The settlement involves contracts in which ETS provided testing and research-related services and was reimbursed for retiree medical benefit costs, according to a statement by Paul Fishman, the U.S. attorney in New Jersey. After government rules changed in 1999 and no longer allowed such reimbursements, ETS continued to bill for the costs, Fishman said.

ETS, a nonprofit based in Princeton, New Jersey, disclosed the improper charges to the Education Department in 2007, Fishman said. In addition to the $1.4 million, ETS reimbursed the government $3.2 million for the overbilling and interest, according to the statement.

“It is our job to protect taxpayers from contractors who charge more than they should,” Fishman said in the statement.

ETS spokesman Tom Ewing said the company mistakenly continued to reimburse retirees after the government changed rules that had been in place for many years.

“ETS disclosed this oversight to DOE in 2007 and later reimbursed the department in full, with interest,” Ewing said in an e-mail. “Today’s agreement resolves matters to everyone’s satisfaction.”

Founded in 1947, ETS develops, administers and scores more than 50 million tests annually in more than 180 countries and 9,000 locations. The tests it administers include the Scholastic Aptitude Test and the Graduate Record Examination.

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