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.
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Penalties
DOJ Releases 2022 FCA Civil Monetary Penalties Inflation Adjustment
On May 9, the Department of Justice (DOJ) published its Final Rule on the Civil Monetary Penalties Inflation Adjustment for 2022. This adjustment comes just five months after the last CMP Inflation Adjustment.
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Eleventh Circuit Becomes First Appeals Court to Hold that Excessive Fines Clause Applies in Declined FCA Cases
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).
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DOJ Releases 2021 FCA Civil Monetary Penalties Inflation Adjustment
On December 13, the Department of Justice (DOJ) published its Final Rule on the Civil Monetary Penalties Inflation Adjustment for 2021. Under the Bipartisan Budget Act of 2015, the DOJ annually adjusts for inflation civil monetary penalties provided by law that are within the jurisdiction of the DOJ, with respect to violations occurring after…
Mixed Messages: DOJ Releases New FCA Cooperation Guidelines, while Study Questions Whether Cooperation Actually Garners Credit
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
The Eliminating Kickbacks in Recovery Act: An Unprecedented Expansion of Anti-kickback Liability to Private-Pay Referrals?
A recent piece of federal legislation intended to address the opioid crisis across the United States may have some unintended consequences. In attempting to prohibit “patient brokering” in the narrow context of addiction treatment and recovery centers, Congress may have unwittingly passed an unprecedented expansion of federal prosecutorial authority over payment arrangements between providers and referral sources for private-pay patients. For the reasons discussed in this blog post, any individual or entity who provides services relating to addiction treatment or recovery (as well as all clinical laboratories, regardless of whether they provide any addiction treatment or recovery services) should examine their arrangements with all referral sources for private-pay patients, even those who do not refer patients for addiction treatment or recovery services.
On October 24, 2018, the President signed into law the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (the “SUPPORT Act”), as discussed here. The SUPPORT Act consolidated a number of opioid-related bills, including the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which was intended to address the problem of “patient brokering” in the context of treatment centers and sober homes.Continue Reading The Eliminating Kickbacks in Recovery Act: An Unprecedented Expansion of Anti-kickback Liability to Private-Pay Referrals?
FCA Deeper Dive: Developments Regarding Penalties and Damages
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
Agency Announces Rule Doubling FCA Penalties
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.
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Bipartisan Budget Act Increases 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.
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