May 16, 2012

In this alert, Partner Julie M. Carpenter discusses a new damages argument by the Department of Justice under the False Claims Act.  DOJ’s most recent attempt to expand damages is its claim that in fraudulent inducement False Claims Act cases, every payment made under the fraudulently induced agreement constitutes actual damages, even when the government has lost no money as a result of the fraud.  DOJ essentially seeks to re-define False Claims Act damages to make economic loss irrelevant.  The article addresses recent case law and DOJ’s effort to extend existing precedent to justify their new damages theory.  Ms. Carpenter explains why DOJ’s damages theory is flawed and suggests steps contractors should consider to challenge it.