Ninth Circuit Limits Damages In Government Procurement Case

On August 8, the Ninth Circuit issued a key decision clarifying two important aspects of damages under the False Claims Act (FCA) in the government procurement context.

The Ninth Circuit's holding limits potential damages government contractors may face.

1. Statutory penalties tied to number of invoices: The court held that the number of statutory penalties under the FCA and similar state statutes should be tied to the number of fraudulent contracts or invoices at issue—not the number of defective goods provided under the contract.
2. Damages means lost value in goods: The court held that actual damages under the FCA should only cover the entire amount paid under a contract if the goods provided under a contract had absolutely no value at all.