DOJ Nearly Doubles FCA Penalties; May Raise Constitutional Concerns

By on June 30, 2016

On June 29, 2016, the US Department of Justice (DOJ) issued an anticipated interim final rule that substantially increases penalties under the False Claims Act (FCA).  Under the interim final rule, minimum penalties per claim will dramatically spike from the current $5,500 to $10,781, and the maximum penalties per claim will jump from $11,000 to $21,563.  As we previously reported, the substantial increase in FCA penalties has been expected since the Railroad Retirement Board (RRB) issued a similar interim final rule in May 2016.  The massive increase in FCA penalties comes in response to the Bipartisan Budget Act of 2015, which requires agencies to adjust penalties for inflation over the past 30 years.

The increased FCA penalties are set to go into effect on August 1, 2016 and will apply to claims after November 2, 2015.  As we have observed, the increased FCA penalties may raise constitutional concerns regarding defendants’ due process rights and under the Eighth Amendment’s bar on excessive fines.  With FCA cases increasingly involving tens of thousands of claims, the application of these increased penalties could easily result in circumstances where punitive recoveries are dramatically out of proportion with single damages.

There is a 60-day comment period associated with the interim final rule, which is available here.

Amandeep S. SidhuAmandeep S. Sidhu
Amandeep (Aman) S. Sidhu focuses his practice on complex commercial disputes with an emphasis on regulated industries, including health care-related investigations and litigation. He represents hospitals and health care companies in investigations and defense of qui tam whistleblower litigation involving federal False Claims Act (FCA), Stark Laws and Anti-Kickback Statute in federal district courts throughout the United States. Aman regularly supports settlement negotiations with the US Department of Justice for clients in multiple jurisdictions, including negotiation of corporate integrity agreements with the US Department of Health and Human Services Office of Inspector General. Aman also represents health care and life sciences companies in the navigation of state and federal investigations, including responding to congressional inquiries. Aman serves on the Firm's Diversity/Inclusion Committee, Pro Bono and Community Service Committee and Associate Development Committee. Read Amandeep Sidhu's full bio.

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