Stericycle, Inc., the Lake Forest, Illinois-based medical waste disposal company will pay $27.75 million to settle federal and state false claims charges.

Stericycle has provided medical waste disposal services to school districts, health departments, colleges, police departments, nursing homes and municipalities.

The lawsuit alleged that Stericycle violated state and federal false claims laws by overcharging government customers by automatically increasing its charges up to 18 percent annually in violation of prices set by contracts.

“Companies that defraud taxpayers by overcharging for their services must be held responsible,” said Massachusetts Attorney General Maura Healey. “We are pleased to have worked with our federal and state partners to recover these critical funds.”

The settlement resulted from a lawsuit by a whistleblower, or “relator” under the False Claims Act, who was a former employee of the company.

Stericycle denied all allegations raised by the former employee and is settling this matter without admitting fault or wrongdoing.

The parties announced that they agreed to settle the matter to avoid the delay, uncertainty, and expense of continued litigation.