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False Claims Act penalties increase in 2020

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The US Department of Justice has raised the minimum and maximum penalties that can be assessed for violations of the False Claims Act, as well as civil monetary penalties under other laws, starting this month as part of a regular adjustment of those fines for inflation.

Civil penalties for False Claims Act violations are now between a minimum of $11,665 and a maximum of $23,331 per violation occurring after Nov. 2, 2015, and assessed after June 19, 2020, when the new penalties were adopted.

Prior to this adjustment, False Claims Act violations carried a minimum $11,181 and a maximum $22,363 penalty for violations occurring after Nov. 2, 2015 and assessed after Jan. 29, 2018.

DOJ filed notice of the new minimum and maximum False Claims Act penalties in the Federal Register on June 19, 2020. The changes were made in accordance with the Bipartisan Budget Act of 2015 (BBA).

That law revised the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990 and changed the formula for calculating annual inflation adjustments. The adjusted penalties apply only to violations occurring after the enactment of the BBA.

DOJ did not adjust the penalties in 2019. Prior to that, DOJ made adjustments in 2016 and 2017, as reflected in the table accompanying DOJ’s notice.

Under the False Claims Act, individuals, companies and other entities that defraud the government are liable for as much as three times the damages caused by their fraud plus penalties for each violation.

The penalties are an important component of the False Claims Act, which seeks to deter fraud against the government by making sure that the cost of getting caught is more than the benefit from engaging in the fraudulent conduct.

 

How does the False Claims Act work?

The False Claims Act is a whistleblower law that empowers private citizens to sue companies, people or other entities that defraud the US government and recover funds on the government’s behalf. Fraud cases brought by whistleblowers are called “qui tam” cases, which is short for a Latin phrase that describes a person who sues on behalf of the government.

Whistleblowers who bring successful cases are entitled to rewards of 15 percent to 30 percent of the amount recovered. If they suffer from job retaliation because of their efforts to stop fraud against the government, they can sue under the False Claims Act for reinstatement, back pay, other damages and attorneys’ fees.

(Read more about how the False Claims Act works and its history.)

 

False Claims Act cases have recovered billions of dollars

Since Congress overhauled the False Claims Act in 1986, the federal government has recovered over $44.7 billion – excluding billions in criminal fines – as a result of whistleblower cases.

In fiscal year 2019, the federal government recovered $3.05 billion from False Claims Act cases. Out of that total, $2.2 billion were the result of whistleblower cases.

 

About Phillips & Cohen

Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling over $12.3 billion. We have been recognized for our work by numerous national awards. Our attorneys and cases have been in The New York Times, The Wall Street Journal, the Financial Times and other news media. Three of our cases were featured in the CBS series, “Whistleblower.” Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.

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