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FCA Whistleblowers' Increasing Reliance on 'Tainted Claim' Damages Theory

In a “Feature Comment” published in The Government Contractor, Crowell & Moring attorneys explore how False Claims Act (FCA) plaintiffs are taking an increasingly aggressive posi­tion on how damages should be calculated—i.e., that the government is entitled to three times the amount of the total contract value, regardless of any value actually received, because the claim for pay­ment was “tainted” by an underlying legal violation. Whistleblowers (referred to as relators under the FCA) have strong financial incentives to push for extensive damages the “tainted claim” theory because their bounty is tied to the amount of the gov­ernment’s recovery. But to the defense bar and industry, such recoveries—in cases where goods and services were delivered—seem like a windfall. The article explores how courts have addressed the tainted claim theory in cases in which the market value of the harm is not readily calculable, such as in cases of fraudulent inducement and small business fraud.

Crowell & Moring LLP is an international law firm with approximately 550 lawyers representing clients in litigation and arbitration, regulatory and policy, and transactional matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation, as well as its ongoing commitment to pro bono service and diversity, equity and inclusion. The firm has offices in Brussels, Doha, London, Los Angeles, New York, Orange County, San Francisco, Shanghai, and Washington, D.C.

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