Recovery Potential

The size of the potential recovery is a significant factor for both the government and a potential whistleblower. The government is naturally more interested in pursuing Qui Tam actions where the amount it stands to recover is high. For whistleblowers, the same is true.

Assessing the potential recovery involves answering two questions: what are the damages to the government caused by the fraud, and what is the potential defendant's financial ability to pay a damages award?

Calculating damages ordinarily requires comparing how much money the government actually paid or received with what the government would have paid or received if the facts had been as the defendant represented or the government had known the truth. If, for example, the government paid for tests that weren't performed, the usual measure of damage would be the amount the government paid for those tests. But the fraud may have caused damages beyond the amounts paid to the defendant.

For example, if a contractor uses inferior concrete to build a structure, the damage to the government would include not only the amount paid to the contractor, but also the amount required to rebuild the structure. Try to calculate the amount of money required to put the government in the same position it would have been if no fraud had occurred. Finally, remember that in order to punish those who defraud the government, the False Claims Act provides for a judgment against the defendant equal to three times the government's actual damages.
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