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Abstract

This Note analyses the Fifth Circuit’s decision in United States ex rel Varva v. Kellogg Brown & Root, Inc. to award civil punitive damages against a corporation after an employee violated the Anti-Kickback Act, 41 U.S.C. §§ 51-56 (1986). The statute prohibits individuals from offering bribes to the U.S. government in exchange for preferential treatment under government contracts. Traditionally, corporations were held liable for employee violations in amounts equal to the value of the kickback. Essentially, the corporation was responsible for making the government whole in recoupment of the benefit received by the corporation. Individuals, on the other hand, suffered more stringent penalties for knowingly violating the statute. The statute punished knowing violations with $11,000 per occurrence penalties, plus the value of the kickback. InKellogg, the Fifth Circuit Court held that a corporation can be vicariously liable for knowing violations of the statute and suffer per occurrence penalties.

This Note argues that the Fifth Circuit inappropriately determined that vicarious liability could be imputed to a corporation by dismissing the statute’s punitive characteristics and disregarding the application of the act-for-the-benefit-of-the-principal rule of agency. It provides background information on the Anti-Kickback Act and its applicability in government contracts. It also describes the application of vicarious liability and punitive damages under similar statutes.

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