Academic journal article Defense Counsel Journal

Immunity Blanket Shields County Government

Academic journal article Defense Counsel Journal

Immunity Blanket Shields County Government

Article excerpt

FALSE CLAIMS ACT

In a False Claims Act (FCA) case filed more than eight years ago, the Third Circuit has held that a Pennsylvania county is not responsible for claims under the act because the statute mandates treble damages against a losing party. This mandatory punitive damages scheme would interfere with the immunity that local governmental units enjoy from those damages, the court held in United States ex rel. Dunleavy v. County of Delaware, 279 F.3d 219 (2002).

The litigation arose from a transaction dating back more than 25 years between the U.S. Housing and Urban Development and Pennsylvania's Delaware County, which had used HUD funds to purchase land on which it intended to build a park. Several years later, the county sold the property to the Pennsylvania Department of Transportation, which anticipated building a highway. The county put the HUD money into an interest-bearing account, which was established on the assumption that if the Department of Transportation did not use the property for a highway, the county would buy back the land. If the highway were built, then the county would return the funds, with interest, to HUD. A highway was constructed on the land in 1991.

The whistle-blower plaintiff, who had been a consultant to the county on HUD regulatory requirements, filed a lawsuit under the False Claims Act as a relator for the federal government. He alleged that the county's use of the HUD funds violated the act. According to his complaint, the county occasionally used the funds from the special bank account for general county purposes, which was an improper use of the funds, and the county also had failed to comply with various HUD reporting requirements.

After the action was commenced, HUD demanded that the county repay $1. …

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