Published on:

False Claims Act Penalties to Increase

medication-1329267The False Claims Act 31 U.S.C. 3729 imposes treble damages and civil penalties for submitting false or fraudulent claims to the government. The FCA statute states that the defendant is subject to a penalty of between $5,000 and $10,000 for each false claim submitted.  This amount is, according to the FCA, adjusted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, which increased the civil penalties to $5,500 and $11,000.  Earlier this month, the Bipartisan Budget Act of 2015 was passed which will again raise federal civil penalties, and penalties under the False Claims Act.

Although the penalties may increase into the $15,000 range, few False Claims Act cases are settled which include a designated portion of the settlement amount to penalties.  Most False Claims Act cases that do settle and the majority do not go to trial, will settle for around double damages.  Only after a trial is a defendant likely to be subject to the increase penalties.

The Bipartisan Budget Act of 2015 is copied below.

If you would like more information about the False Claims Act, or filing a case under the qui tam provisions of the False Claims Act as a whistleblower contact the law office of Michael C. Rosenblat for more information.

Public Law No: 114-74 (11/02/2015)

Bipartisan Budget Act of 2015

TITLE VII–JUDICIARY

Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015

(Sec. 701) This title amends the Federal Civil Penalties Inflation Adjustment Act of 1990 to require federal agencies that impose civil monetary penalties subject to inflation adjustments under the Adjustment Act to adjust the penalties for inflation annually instead of at least every four years.

The categories of penalties required to be adjusted for inflation under the Adjustment Act are expanded to include civil penalties under the Occupational Safety and Health Act of 1970 and the Social Security Act.

For all civil penalties adjusted for inflation under the Adjustment Act, federal agencies must make an initial adjustment after enactment of this bill by the percentage by which the Consumer Price Index (CPI) for October 2015 exceeds the CPI for the month of October of the calendar year during which the amount of such civil monetary penalty was established or adjusted under a provision of law other than this bill. The increase in penalties from the initial adjustment is prohibited from exceeding 150% of the amount of that penalty on the date of enactment of this bill.

An agency may adjust penalties by less than the required amount under an exception that applies to the first adjustment if: (1) the agency determines in a rulemaking with an opportunity for public comment that the adjustment would have a negative economic impact or social costs that outweigh the benefits, and (2) the Office of Management and Budget (OMB) concurs.

The annual inflation adjustment in subsequent years must be a cost-of-living adjustment based on any increases in the October CPI each year.

Inflation adjustment increases must be rounded to the nearest multiple of $1.

This section also requires: (1) the OMB to issue guidance to agencies regarding the implementation of adjustments, (2) agencies to include information about adjustments to civil monetary penalties in agency financial reports, and (3) the Government Accountability Office to submit an annual report assessing agency compliance.”