Civil Fines for False Claims Act Cases Have Recently Been Adjusted
The Civil Fines applicable to False Claims Act Cases were adjusted recently to take into account inflation. That is required under law.
The lowest number as of June 19, 2020, is $11,665 per claim, and the maximum penalty increased from $22,363 to $23,331 per claim as of June 19, 2020.
Applying these fines is complicated, because the adjustment is not retroactive. Figuring out what level of civil fines would apply in any given currently pending case requires a lot of work. Of course, the fact that there is a range of civil fines from which a Judge or Jury could reasonably pick between, to assess a fine makes it more unwieldy.
We’d be very happy to figure out what the liability in fines for any case is, in fact some colleagues of mine are circulating charts to be sure we can all do that right now. So no matter how complicated the situation figuring out what defendants’ should have to pay in fines is an issue we can overcome.
What makes the lawyers who fight fraud especially frustrated is, despite case law showing these fines should be imposed, they rarely are. They should be.
Fines should be imposed for committing fraud against the United States. Why, one wonders, is this a difficult concept for people to grasp?
The initial False Claims Act, the one you will hear us attribute to the Lincoln Administration of 1863, took this concept seriously. There was a $2,000 fine for each violation and obviously, $2,000 in 1863 was serious money. So the law as originally contemplated included the idea that civil fines should mean something.
These days we might just take $2,000 per instance today, if it was automatically required, over the theoretical $23K, which almost never is.
These fines can and should become a really good way to impose a penalty when the damages in a case in monetary terms are obscure, but as is often the case when we talk about government contracting, the harm to people is quite serious. I’m proud to have worked on a number of cases like this. It can happen, say a pharmacy messed charging for formula meant for infants/young kids that was not particularly, expensive so the damages in a monetary sense did not matter, but the harm or at least the potential harm to a patient could be huge. Civil fines could play a role in enforcing the idea that fraud should not be permitted.
There are some people out there, always fighting damages theories and they gain ground any chance they get. Repeated violations however, should not mean repeatedly waiving the civil fine so as to let everything go. Suppose mortgages are issued illegally with government insurance, but with not much in the way of government damages. If there is fraud involved should not a violation of a fraud statute mean actually paying the civil fine for the fraud.
I know my colleagues in this area can list hundreds of examples of frauds, which absolutely deserve to be handled this way. Indeed, a civil violation deserves a civil fine.
Why historically this tool has not been used to its fullest extent is difficult to fathom. It falls to False Claims Act advocates to advise our clients of that unfortunate reality. It is highly unlikely that your case involving 1,000 civil fraud violations will receive the more than $20 million in civil fines that the law can impose, but at the same time we should take every opportunity to remind everyone…that is what really should happen.