Court Ruling Provides Blueprint for Deducting False Claims Act Damages

A recent federal court decision creates a roadmap for defendants seeking to obtain a tax deduction for damages paid under the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq. The ruling, Fresenius Medical Care Holdings, Inc. v. United States, No. 08-12118, 2013 WL 1946216 (D. Mass. May 9, 2013), underscores that any such defendant must compile as much evidence as possible during settlement negotiations with the Department of Justice (“DOJ”) demonstrating that the award is compensatory, not punitive.