Hoang Tran Jan. 25, 2016, 11:49am


WASHINGTON (Legal Newsline) - Due to the passage of the Federal Civil Penalties Inflation Adjustment Act of 2015, the maximum civil penalties for fraud against the government have now been increased to $11,000 for 2016.

“The per claim penalties had been in place for several years, and were therefore made subject to provisions that would allow them (but not require them) to be raised in order to keep pace with inflation,” said Eric H. Cottrell, attorney for Parker Poe who leads the firm's Antitrust, Business Torts & White Collar Practice Group.

“The $11,000 per claim penalty represents the maximum penalty permissible under prior law – exactly double the $5,500 per claim minimum penalty.”

In 2015, the Department of Justice recovered more than $3.5 billion in settlements and judgments from civil cases involving fraud and false claims under the False Claims Act (FCA). This is the fourth year in a row that the department has exceeded $3.5 billion in recoveries. The total amount of money obtained from January 2009 to the end of 2015 is $26.4 billion.

Of the more than $3.5 billion recovered last year, $1.9 billion came from allegations that health care professionals and companies provided unnecessary or inadequate care, paid kickbacks to health care providers to induce the use of certain goods and services, or overcharged for goods and services paid for by Medicare, Medicaid and other federal health care programs.

The next largest recoveries were connected with government contracts, which totaled $1.1 billion. The government contracts outside companies to provide food, clothes and equipment for military personnel; manufacture military aircraft, ships and weapons systems; and provide everything that is needed to fund myriad government programs.

While the penalties have increased, Cottrell does not believe that it will deter companies from conducting business that requires reimbursement from the federal government.

“Many companies – both large and small – continue to seek out potentially lucrative government contracts,” he said. “Companies would be well advised, however, to include the costs of compliance in their analysis.”

The increased penalties won't likely contribute to any recovery records being broken - it all depends on the cases, according Cottrell.

“That is unlikely. Whether or not the record will be shattered will likely depend on the volume and nature of the False Claims Act cases resolved during the coming year," he said. 

"For example, prior years contained a large number of FCA settlements relating to federally subsidized mortgages, but those cases significantly dwindled during 2015."

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