The Sixth Circuit in United Technologies Corp. Requires Government to Prove Actual Loss for False Claims Act Damages
17 April 2015Government Contracts Alert
The Department of Justice and qui tam relators were dealt another blow regarding how damages are calculated in False Claims Act (FCA) cases. In an FCA case involving allegations of defective pricing, the U.S. Court of Appeals for the Sixth Circuit in United States v. United Technologies Corporation overturned the lower court's award of US$657 million in damages. The Sixth Circuit ruled that the district court erred in accepting the government's damages calculations, which were based "dollar-for-dollar" on the amounts by which the defendant's cost and pricing estimates were inflated. The court emphasized that damages must account for whether the government received the benefit-of-the-bargain. If "the government gets what it paid for despite a contractor's misstatements, it has suffered no 'actual damages.'"