Contractors, Grant Recipients Beware: Termination Settlements May Heighten FCA Liability

Litigation attorneys Megan Mocho, Amy Fuentes, Laura Supple and Roza Sheffield co-authored an article for Westlaw Today breaking down False Claims Act (FCA) liability risks for government contractors and federal grant recipients facing terminations and considering settlements or grant closeouts. A number of federal agencies have terminated contracts and grants amid the rollout of the U.S. Department of Government Efficiency's (DOGE) cost efficiency initiative, leading contractors and recipients to turn to settlement proposals or grant closeout packages to recover costs and mitigate losses. However, the authors say, doing so implicates the FCA, which is designed to combat fraud against the government by imposing liability on companies and individuals that knowingly submit false claims for federal funds. In their article, the attorneys provide an overview of the statute and the process for terminating a contract or grant before analyzing the risks associated with settlements, such as misrepresenting costs or inflating claims. They also list best practices for minimizing the risk of FCA liability, including maintaining rigorous compliance programs and internal controls as well as implementing clear whistleblower policies.

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