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.
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.
Jonathan Porter | Full Biography
Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, drawing on his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white-collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.
Lorinda Holloway | Full Biography
Based in Austin, Texas, Lorinda is a member of Husch Blackwell’s Healthcare, Life Sciences and Education industry team and counsels clients on matters concerning government investigations and disputes. For more than 25 years, she has advised and represented clients in and out of the courtroom with a particular focus on the healthcare industry, including False Claims Act, Texas Medicaid Fraud Prevention Act, and qui tam related investigations and lawsuits, audits, as well as business disputes in state and federal court. Lorinda’s experience in healthcare has also led to the education field, including a focus on the legal challenges faced in academic medicine.