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ARTICLE · 05 APRIL 2002

Courts Split on Whether Local Governments Subject to False Claims Act

Holland & Knight LLP
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United StatesGovernment, Public Sector
Kristen Ittig
Kristen Ittig

The U.S. Court of Appeals for the Seventh Circuit recently held that a municipality is a "person" within the meaning of the civil False Claims Act (31 U.S.C. §3729 et seq.), and thus can be sued for damages under the Act. (United States ex rel. Chandler v. Cook County, Ill., Case No. 00-4110). This ruling is in direct contrast to earlier rulings in other Federal Circuits (see Government Contracts Newsletter, December 2001 for a full discussion of previous cases) and makes it likely that the Supreme Court will be petitioned to decide this issue. If the Supreme Court accepts the Chandler holding, local taxpayers may be forced to foot the bill when the local officials submit false claims to the federal government.

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