Court Ruling Provides Blueprint for Deducting False Claims Act Damages

Sidley lawyers Kristin Graham Koehler and Brian Morrissey have authored an article as a part of the Washington Legal Foundation’s Counsel’s Advisory series, entitled “Court Ruling Provides Blueprint for Deducting False Claims Act Damages.” The article examines the recent ruling in Fresenius Medical Care Holdings, Inc. v. United States, No. 08-12118, 2013 WL 1946216 (D. Mass. May 9, 2013), a potentially path-marking decision by the U.S. District Court for the District of Massachusetts. The decision allowed a defendant in an FCA suit to present evidence that damages it paid under the Act were tax-deductible compensatory payments to the Government, despite the fact that the Department of Justice, consistent with its customary practice, refused to agree to the tax characterization of the damages payment. The ruling establishes an important precedent for individual and corporate FCA defendants seeking to determine the likely tax treatment of potential damages awards.

The article is available for download on the Washington Legal Foundation’s website: