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Civil Penalties Under the False Claims Act Set to Rise

Increased Civil Penalties Under the False Claims Act – Business Litigation Attorneys Explain

On June 30, the Department of Justice announced that it is adjusting the civil monetary penalties imposed under the False Claims Act, effective August 1, 2016.  This follows a similar increase announced by the Railroad Retirement Board back in May of this year.

Currently, each false claim submitted for payment to the federal government subjects a defendant to a minimum monetary penalty of $5,500 to $11,000 per claim, in addition to an amount equal to three times the actual damages suffered by the government as a result of the claim.  As a result of this inflationary adjustment, the penalty range increases from a minimum of $10,781 to a maximum of $21,563 per claim – nearly double the prior range!

These changes could have a dramatic effect on the government’s recovery in some cases.  Often, False Claims Act cases involve small-dollar amounts of fraud.  For instance, if a doctor knowingly charges Medicare using the wrong billing code in order to get reimbursed at a higher rate, the difference in the amount the doctor was paid and should have been paid could be a matter of $10-20 dollars per claim.  That doctor would now also be facing a penalty of $10,781 to $21,563 per fraudulent claim.  This is a significant hammer with which to encourage both compliance with the law and pre-trial settlement.

Before you get too excited about this increase, note that if the government intervenes in a case, the government does not generally seek these penalties if a defendant is willing to settle before trial.  Thus, if one files a qui tam case on behalf of the government alleging violations of the False Claims Act, whistleblowers may or may not benefit from this change, depending on the case.  That being said, if the government does not intervene, or the case goes to trial, this change could increase the pot of money out of which a whistleblower can seek a bounty.

All in all, this is excellent news in the quest to fight fraudsters from living off of ill-gotten gains.