Berenzweig Leonard is beginning the New Year with a summary of four important government contract legal decisions handed down in 2013. A previous blog article discussed the one-sided legal concept of “apparent authority” that applies to a government contractor but not to the government. Today we discuss another problem presented by “apparent authority”: how the management of a government contractor could be liable for kickbacks company employees receive.
Decision 2. Corporate Liability for Employee Kickbacks
Apparent authority can cost a contractor significant penalties under the Anti-Kickback Act (AKA)
. Regardless of whether a government contractor
knew that its employees were violating the AKA), the company may be civilly liable – for each occurrence, double damages plus $11,000 – for kickbacks its employees received. Alternatively, regardless of what a government contractor knew, the contractor may be liable for the actual amount of the kickback. An appeals court held that the company could be liable for “double damages plus $11,000” for its employees’ violations of the AKA based on “apparent authority
f, later in the litigation, the government proved that the kickback-accepting employees had the apparent authority
to implicate their employer. United States ex rel., David Vavra v. Kellogg Brown and Root
, U.S. Court of Appeals for the Fifth Circuit No. 12-40447, July 19, 2013.
Terry O’Connor is the Director of Government Contracts with Berenzweig Leonard, LLP, a DC regional business law firm. He can be reached at [email protected].