Morristown, NJ

NJ Transit Defrauded, $20.5 Million Settlement For Academy Bus

Morristown Minute

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Morristown Minute

A settlement from a lawsuit will require Academy Bus to pay $20.5 million for defrauding NJ Transit for nearly 20 years.

Academy Bus, one of the largest privately-owned transportation companies in the U.S., will pay $20.5 million to settle a civil fraud lawsuit filed by New Jersey state.

The lawsuit claims Academy Bus underreported missed bus trips and over-billed NJ Transit for hours and miles driven. Authorities called the discovery an “extensive multi-year, multi-million-dollar fraud” scheme taking place since 2003.

In addition to the $20.5 million, Academy Bus, based in Hoboken, NJ, agreed to be monitored by an independent company to ensure Academy Bus accurately logs “missed trips” and miles traveled.

The deal, announced Friday (2/11), is the largest non-healthcare related False Claim Act settlement in New Jersey State history.

The settled lawsuit also claims Academy Bus’s internal records tracked two separate sets of bus trip numbers – real numbers, which they labeled “RN”, and adjusted numbers. The adjusted numbers altered the count of missed bus trips to a significantly lower amount. Those adjusted numbers were then reported to NJ Transit.

Academy Bus billed NJ Transit $12 million annually for operating 7 NJ Transit bus routes in Hudson County. These routes handle about 175,000 trips per year. 

In one month, September 2018, Academy Bus missed just over 1800 scheduled trips - but they only reported 804.5 missed trips to NJ Transit.

Academy Bus would shift drivers from less profitable routes to more popular trips, often leaving riders delayed or stranded. Academy Bus in turn filed false reports to NJ Transit seeking compensation for the miles and hours of the canceled trips.

NJ Transit charges Academy Bus $150 for each missed trip reported and $300 for every missed trip not reported and discovered at a later date.

In 2016, Academy Bus missed 13,234 trips but only reported 1,173 missed trips to NJ Transit, costing NJT $3,618,300 - in one year.

The company later altered their numbers (“RN” vs. Adjusted”) to prevent NJ Transit from discovering the scheme.

A $15 million lawsuit filed by NJ state’s Attorney General in November 2020, brought about by evidence from whistleblower Hector Peralt, a former Academy Bus employee, led to the eventual $20.5 million settlement. Peralt will reportedly receive a portion of the settlement.

As part of the settlement, Academy Bus admitted no wrongdoing.

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