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The <i>Chandler</i> Decision: What It Means

By John T. Boese and Beth C. McClain
April 01, 2003

In March, the United States Supreme Court issued a decision in a False Claims Act case that has been closely watched by public and private entities alike. See Cook County v. United States ex rel. Chandler, 123 S. Ct. 1239 (2003). This article is intended to put that decision in perspective, to help readers understand what Chandler actually holds, and to reflect upon the future of False Claims Act litigation in the wake of Chandler and other recent Supreme Court decisions on punitive damages.

Are Municipalities Subject to 'Punitive' FCA Liability?

The Supreme Court was confronted with two fundamental questions in the Chandler case: 1) whether Congress intended the FCA to apply municipalities when the law was originally enacted in 1863, and 2) whether Congress intended the Act to apply to municipalities when it increased FCA damages and penalties in 1986. Although courts were split on the issue, a majority had held that local governments are not subject to qui tam liability under the “essentially punitive” provisions of the civil False Claims Act. Other courts held that even when local governments were sued under the FCA by the Justice Department, the punitive nature of FCA damages precluded municipal liability. See John T. Boese, Civil False Claims and Qui Tam Actions, ' 2.07[D] (Aspen Pub. 2d ed. Supp. 2003-1).

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