Ten years ago, ZZK Corporation entered into a cost-based contract with an agency
ID: 2527917 • Letter: T
Question
Ten years ago, ZZK Corporation entered into a cost-based contract with an agency of the federal government to sell excess electrical generating capacity to an agency of the federal government at its “lowest reasonable cost.” A former employee of ZZK alleged that the company had overcharged the federal government by a significant amount over a five-year segment of the contract. The former employee filed a qui tam law suit against the ZZK Corporation. The U.S. Department of Justice decided to litigate all seven alleged areas of overcharging cited in the whistle blowers qui tam law suit. In the qui tam law suit the whistle blower alleged total actual damages (overcharges to the federal government agency) of $86,000,000.
Assume that the court finds that two of the alleged overcharging issues were not valid, three were simple contractual errors totaling $15,000,000, and two of the overcharging allegations, totaling $12,000,000 were found to show a reckless disregard for the truth and as such were fraud under the Federal False Claims Act. The damages that will be awarded to the federal government in this situation will be:
a. $27,000,000 b. $12,000,000 c. $15,000,000 d. $51,000,000 e. None of the above
Explanation / Answer
The damages that will be awarded to federal goverment is = 15$ million + 12$ million = 27$ million. Which are the damages suffered by the agency of federal goverment as found out by the court.
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