U.S. Department of Justice Moves to Raise the Amount of Penalties Defendants Must Pay if Found Liable under the False Claims Act

Published on: July 21st, 2016

Under the False Claims Act today, a defendant if found liable in a court of law must pay civil penalties in the amount of between $5,500 and $11,000 for each false claim submitted to the Government.  A false “claim” is any form of seeking funds from the Government to which the defendant is not entitled due to ineligibility or otherwise, or the failure to return Government funds a defendant knew it was required to return but instead withheld.   A whistleblower who brings a case under the False Claims Act case, receives a share of between 15% and 30% of the total civil penalties paid to the government by the defendant.

The Department of Justice (“Department”) has said it intends to increase the minimum per-claim penalty from $5,500 to $10,781 and to increase the maximum per-claim penalty from $11,000 to $21,563.   The adjusted amounts would apply only to civil penalties assessed after August 1, 2016 for violations of the FCA that occurred after November 2, 2015.

The Department must go through the formal rule making process to implement the increases and has set up a 60-day period for public comment on the proposed increases.  That comment period closes on August 29, 2016.  After that date, the Department will issue a final rule setting the amounts of the per-claim penalties.  It is up to the judge in each False Claims Act case after trial to decide whether the defendant must pay the minimum or a larger penalty on each false claim.

These civil penalties are in addition to any damages the defendant must pay if found liable under the Act.  Damages are the value of the funds fraudulently taken from the Government by the defendant and under the Act the Government can collect three times its actual damages.  A successful whistleblower receives between 15% and 30% of that trebled amount of damages.

The planned increase in civil penalties may deter some wrongdoers and it will increase the settlement value of cases involving false claims submitted to the government after November 2, 2015.

If you are aware of facts that may constitute fraud on the government, please contact our office for a confidential review of your potential False Claims Act case, at no charge to you.

This article was drafted by Wilbanks & Gouinlock, LLP and is intended for general informational and educational purposes only and should not be construed as legal advice.