Contained within the bipartisan budget deal passed by Congress on November 2, 2015, the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 (the “Improvements Act”) mandates that all federal agencies make inflation-based adjustments to all civil monetary penalties (“CMPs”) within their respective jurisdictions by August 1, 2016. On June 30, the Department of Justice issued an interim final rule which will increase the per-claim penalty range under the False Claims Act (“FCA”) from the current range of $5,500 to $11,000, to a new range of $10,781 to $21,563. Further, the Improvements Act also mandates that agencies continue to make inflation-based adjustments on an annual basis moving forward.

Importantly, these adjustments will apply only to civil penalties assessed after August 1, 2016, and where the underlying FCA violation occurred after November 2, 2015. Thus, the current penalty amounts of $5,500 to $11,000 will still apply to any FCA violations that occurred on or before November 2, 2015, as well as to any violations occurring after that date if the assessments were made before August 1, 2016.

Additionally, the Improvements Act modified previous legislation that had exempted CMPs under the Civil Monetary Penalties Law (“CMPL”) from requiring inflation-based adjustments. Removing this exemption has the effect of requiring the Department of Health and Human Services Office of Inspector General (“OIG”) to—for the first time—adjust for inflation the penalties available under the CMPL. Those penalties currently reach as high as $50,000 per claim depending on the improper act that caused the claim submitted to be “false.” OIG, as noted above, will have until the August 1, 2016, deadline to enact such an adjustment.

The effect of these adjustments will be to subject healthcare providers to even greater potential liability for fraud and abuse with each passing year, and will likely have the effect of discouraging FCA defendants from litigating cases against the government, thereby leading to more FCA settlements.

The attorneys at Chilivis Grubman have vast experience representing healthcare providers in all types of government investigations, including FCA investigations and litigation. For any questions, or if we can assist you in connection with such a matter, please contact us at (404) 262-6505 or