False Claims Act Penalties Set To Dramatically Rise

Posted on Health Care Law News by Robert Nicholson

The United States Department of Justice (DOJ) recently published an Interim Final Rule announcing that, pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, part of the Bipartisan Budget Act of 2015. Pub. L. No. 114-74, § 701, 129 Stat. 584, 599 (2015), it intended to dramatically increase the minimum per-claim penalty under the False Claims Act from $5,500 to $10,781 and to increase the maximum per-claim penalty from $11,000 to $21,563.  These adjusted amounts will apply to civil penalties assessed after August 1, 2016, whose violations occurred after November 2, 2015.  Violations that occurred on or before November 2, 2015 and assessments made before August 1, 2016 (whose associated violations occurred after November 2, 2015) will be subject to the current civil monetary penalty amounts (i.e., $5500 to $11,000 per false claim).  The last time False Claims Act penalties were increased was in 1999, at which time penalties were increased by only 10%.  DOJ is providing a 60-day period for public comment on this Interim Final Rule.

It is expected that there will be significant pushback from potential False Claims Act Defendants, who will undoubtedly argue that these increases create too much leverage for DOJ, pose too much risk for abuse, and implicate potential constitutional concerns, including with respect to the Eighth Amendment’s Excessive Fines Clause.

The health care law firm of Nicholson & Eastin, LLP regularly represents clients in False Claims Act matters. If you have a False Claims Act matter, please do not hesitate to contact us for a consultation.