Host Jonathan Porter welcomes back Husch Blackwell partner Lorinda Holloway to the podcast to discuss how organizations become liable for false claims by their employees. We begin by discussing how vicarious liability holds employers responsible for employees' actions, though this principle does not always apply directly to punitive laws like the False Claims Act.
We talk about the courts’ two approaches to False Claims Act vicarious liability, including the Grand Union case, in which the Eleventh See more +
Host Jonathan Porter welcomes back Husch Blackwell partner Lorinda Holloway to the podcast to discuss how organizations become liable for false claims by their employees. We begin by discussing how vicarious liability holds employers responsible for employees' actions, though this principle does not always apply directly to punitive laws like the False Claims Act.
We talk about the courts’ two approaches to False Claims Act vicarious liability, including the Grand Union case, in which the Eleventh Circuit Court of Appeals held a company liable for the isolated improper acts of low-level employees, even though no one in management knew false claims were being submitted. We also discuss the rationale behind decisions like Grand Union, including incentivizing companies to develop compliance systems to stop low-level employees from doing improper things.
Our discussion shifts to a series of cases that disagree with Grand Union. These cases state that if the government seeks to recover an amount much greater than its actual losses, then an employer cannot be held vicariously liable under the FCA for wrongful actions carried out by a non-managerial employee—unless the employer was aware of, approved, or acted recklessly regarding the hiring or supervision of that employee. We close the discussion by examining why courts struggle with applying vicarious liability concepts to the False Claims Act and what companies can do to mitigate potential liability for the acts of rogue employees. See less -
