An opinion in a long-running court case involving software company Gen Digital and alleged violations of the False Claims Act saw proposed costs in the matter jump from $1.3 million to approximately $53 million following successful arguments by the U.S. government.
Gen Digital, formerly Symantec Corp. and NortonLifeLock, was accused by former employee Lori Morsell in 2012 of not appropriately disclosing certain discounts and rebates offered to customers in a manner that undermined a General Services Administration (GSA) contract. The U.S. government moved to intervene in the qui tam case.
The court initially calculated rebate damages at approximately $1.1 million and civil penalties at $231,000 in relation to the case. Arguments by the U.S. government regarding each total led to the opinion published Tuesday by U.S. District Judge Rudolph Contreras for the District of Columbia and new calculations of approximately $16.1 million in rebate damages and $36.9 million in civil penalties.
Regarding rebate damages, the court initially found the evidence presented by the United States made it “impossible to calculate an estimate of discount damages to a reasonable certainty.” The government argued the court erred in its initial interpretation that the damages figure should be calculated against estimated discounts, not sales prices on the government’s orders. The court agreed with the argument, described its initial calculation as “flawed,” and reached the new figure of $16.1 million.
For civil penalties, the court initially assessed statutory penalties based on 21 identifiable false statements. The government argued penalties were mandatory as to each claim, of which there were 3,352 that then-Symantec made under its GSA contract. With the government seeking the maximum penalty of $11,000 for each claim, the court agreed with its argument and to the proportion in relation to the alleged offenses.
The court denied several other arguments by the government, including one seeking to find Symantec liable for causing resellers to submit false statements and claims.
Symantec’s arguments regarding the increase in penalties were found to be “unpersuasive,” according to the opinion.
Company response: “Gen disagrees with the court’s amendment of its original judgment from January 2023,” the company said in an emailed statement. “Gen continues to deny the plaintiffs’ allegations and is assessing whether to appeal.”
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