July 26, 2013

Fifth Circuit Establishes Vicarious Liability For Double Damages and Penalties Under The Anti-Kickback Act

Arnold & Porter Advisory

In a case of first impression, the Fifth Circuit interpreted the Anti-Kickback Act (the Act), 41 U.S.C. §§ 8701-8707 (recently re-codified from 41 U.S.C. §§ 51-58), to extend vicarious liability for double damages and penalties to an employer for the acts of its employees. In United States ex. rel. Vavra v. Kellogg Brown & Root, Inc., Civ. No. 12-40447 (5th Cir. July. 19, 2013), the court held that the civil liability provision of the Act, which provides for recovery of double damages and penalties from a person that knowingly engages in a kickback scheme in connection with a government prime or subcontract, permits the Government to attribute liability to corporate defendants vicariously. This decision means that government contractors at all subcontractor tiers must be especially sensitive to the corporate harm that can arise if an employee is alleged to have engaged in kickbacks.

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