The federal False Claims Act (“FCA”) is one of the most powerful tools frequently used by the federal government to combat fraud. The FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government. It prohibits the possession, custody, or control of property or money used, or to be used, by the government and knowingly delivering, or causing to be delivered, less than all of that money or property. 31 U.S.C. § 3729(a)(1)(D). The FCA also prohibits any person from knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim. And under the qui tam provisions of the FCA, whistleblowers (also known as relators) may bring cases on behalf of the government, which may takeover, or intervene.
The FCA’s strength, in part, arises from the potential damages or financial penalties that arise in FCA cases. The FCA allows the government to recover three times its actual losses (treble damages). In addition to treble damages, Defendants face penalties for each violation of the FCA (e.g., each false statement or each false claim submitted or caused to be submitted). The Civil Monetary Penalty range is periodically adjusted, usually annually. In December 2021, Chilivis Grubman attorneys discussed the U.S. Department of Justice’s adjustment of the FCA’s per-claim penalty for inflation as part of the Civil Monetary Penalties Adjustment for 2021.
On May 9, 2022, the DOJ published its Civil Monetary Penalty Inflation Adjustment for 2022. Per-claim penalties will now fall between $12,537 and $25,076 – in increase from a range of $11, 803 and $23,607 per violation. With an approximate 6.2% increase, the 2022 inflation-adjusted civil monetary penalty is the largest increase since 2018. However, penalties for violations after November 15, 2015 are calculated based on the penalty amounts in effect when the penalties are assessed, therefore, the 2022 inflation-adjusted civil monetary penalty amount applies to violations occurring after May 9, 2022.
CG attorneys frequently caution that FCA penalties can be significant. Because penalties are calculated on a per claim basis, certain industries and contractors may face greater penalties based on the volume of claims submitted. For example, the penalties in health care FCA cases can be exorbitant due to the volume of claim submissions in a relatively short time. And sometimes FCA penalties can be more than actual damages. For example, Chilivis Grubman discussed a case where the defendant had only $2,266.62 in damages but due to the volume of claims submitted had amassed penalties over $1.1 million.
The attorneys at Chilivis Grubman represent both companies and individuals in connection with government investigations, both criminal and civil, and in False Claims Act litigation. If you have any questions related to such matters, please contact us today.