Having previously examined the falsity, materiality, and scienter elements of the False Claims Act (FCA) in our FCA Fundamentals series, we now turn to what damages can arise from violations of the False Claims Act. The False Claims Act imposes liability for each false claim. If the alleged scheme is broad, pervasive, or spans an extended period, this can result in many individual false claims and significant damages and penalties. It is essential for defendants to scope damages and consider potential exposure throughout a False Claims Act case, which often requires an expert consultant.

Continue Reading False Claims Act Fundamentals: Damages

The final months of 2021 saw a flurry of noteworthy False Claims Act (FCA) activity. Among other developments, appellate courts issued important decisions concerning materiality, the government’s qui tam dismissal authority, and the application of the Eighth Amendment’s Excessive Fines Clause. The fourth quarter also brought news of several significant settlements, including a group of eight- and nine-figure resolutions of alleged Anti-Kickback Statute violations by pharmaceutical manufacturers and the latest example of a private equity firm paying a substantial sum to resolve FCA allegations leveled against one of its portfolio companies.

This post summarizes key developments from the year’s final quarter and identifies important takeaways for healthcare providers and government contractors.

Continue Reading False Claims Act Decisions and Settlements to Know from Q4 2021

The Eleventh Circuit has become the first federal court of appeals to directly address whether the Eighth Amendment’s Excessive Fines Clause applies to the monetary award in a declined False Claims Act (FCA) case. And in an opinion issued December 29, 2021, the court held that it does. See U.S. ex rel. Yates v. Pinellas Hematology & Oncology, P.A., __ F. 4th __, 2021 WL 6133175 (11th Cir. 2021).

Continue Reading Eleventh Circuit Becomes First Appeals Court to Hold that Excessive Fines Clause Applies in Declined FCA Cases

The U.S. Department of Justice (DOJ) routinely encourages the subjects of False Claims Act (FCA) enforcement actions to make voluntary disclosures and fully cooperate with the government on the premise that cooperation leads to reduced liability. The DOJ recently issued guidance on the types of activities that will earn “cooperation credit.” But how much is cooperation worth, in terms of actual dollars? According to recent data and an analysis by Seton Hall Law School Professor Jacob T. Elberg, perhaps not much.

Discretion over Damages Multiplier Incentivizes Cooperation

The government’s basis for incentivizing cooperation lies primarily in its discretion in seeking damages and penalties allowable under the FCA. A defendant can be liable under the FCA for three times the amount of damages the government sustains, plus a civil penalty for each false claim. But such severe damages and penalties are not required, particularly where the government and a defendant negotiate a settlement to resolve FCA allegations without a court judgment or any finding of liability.

Continue Reading Mixed Messages: DOJ Releases New FCA Cooperation Guidelines, while Study Questions Whether Cooperation Actually Garners Credit

On August 18, 2017, the U.S. Court of Appeals for the Sixth Circuit reversed the denial of a FCA defendant’s request for attorney’s fees and expenses under the Equal Access to Justice Act (EAJA) and held the government accountable for an unreasonable damages demand.

Background

In U.S. ex. rel. Wall v. Circle C Construction, LLC, a subcontractor for the defendant, Circle C Construction, failed to pay $9,900 in wages for electrical work performed in the construction of warehouses. The subcontractor’s paid wages thus failed to meet the requirements of the Davis-Bacon Act. As a result, Circle C Construction’s subsequent statements of compliance with federal regulations, including the Davis-Bacon Act, were false.

Continue Reading Sixth Circuit Reverses Denial of Attorney’s Fees and Expenses, Maintains Cost Recovery for Unreasonable Government Demands

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we continue to take a closer look at recent legal developments involving the FCA. This week, we examine developments regarding penalties and damages under the FCA, which make the FCA such a potent enforcement tool for the government.

For providers facing potential FCA liability, the potential scope of exposure will continue to expand, whether driven by a nearly doubled increase in the penalties recoverable under the FCA, large negotiated settlements backed-up by statistical extrapolation of false claims, or the significant increase in relator-driven litigation in government-declined cases. Questions regarding the manner in which FCA damages should be calculated also are likely to persist.

Continue Reading FCA Deeper Dive: Developments Regarding Penalties and Damages

The Railroad Retirement Board (RRB) became the first federal agency to increase FCA penalties pursuant to the Bipartisan Budget Act of 2015 (Budget Act), which was signed into law last November. The penalties announced by the RRB nearly doubled the prior penalty levels, with the minimum penalty skyrocketing from $5,500 to $10,781 and the maximum penalty from $11,000 to $21,563. As we covered here, the Budget Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act) to require federal agencies to increase civil monetary penalties imposed by the FCA as a “catch up adjustment” to compensate for inflation. The Budget Act also requires agencies to make annual adjustments to penalties in the future.
Continue Reading Agency Announces Rule Doubling FCA Penalties

Signed into law on November 2, 2015, the Bipartisan Budget Act of 2015 requires federal agencies to increase civil monetary penalties imposed by the FCA to account for inflation. The increase – referred to as a “catch up adjustment” – will be implemented through interim final rulemaking procedures under the Administrative Procedures Act and must be in place by August 1, 2016. The amount of the adjustment is based on the difference between the CPI in October of the calendar year in which the penalty was last adjusted and the CPI in October 2015. FCA penalties were increased to their present level in 1999. In addition, the Budget Act requires agencies to continue to make annual adjustments to penalties moving forward, also based on changes in the CPI. Those annual adjustments are automatic and will be implemented without rulemaking procedures or any agency assessment of the need for such an increase.
Continue Reading Bipartisan Budget Act Increases FCA Penalties