Government Contracts Monitor

Short Take: FCA Civil Penalties Adjusted Upward for Inflation

July 5, 2016

The US Department of Justice (DOJ) recently issued an interim final rule increasing the range of penalties for violations of the False Claims Act, 31 U.S.C. §3729 et seq. (FCA). In accordance with the Bipartisan Budget Act of 2015, DOJ has adjusted for inflation the civil monetary penalties assesssed or enforced by DOJ components.

As a result, the penalty range for FCA violations has changed from the current range of $5,500 to $11,000 per false claim, to a new range of $10,781 to $21,563. While penalties under the FCA are mandatory for each false claim, courts have discretion to award any amount within the statutory range. 31 U.S.C. §3729(a). FCA penalties were last raised in 1996.

Congress passed the Bipartisan Budget Act of 2015, Public Law 114–74, on November 2015. Section 701 of the statute, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, requires all federal agencies to amend their regulations to provide for adjustments to the range of civil monetary penalties under their purview. The Bipartisan Budget Act provides for annual adjustments to penalty amounts going forward. Beginning in January of 2017, such adjustments shall be made based on a formula tied to the Consumer Price Index for all Urban Consumers (CPI–U). The Office of Management and Budget is to issue guidance on the annual adjustments by December 15, 2016.

The DOJ rule takes effect on August 1, 2016, and applies to false claims made after November 2, 2015. Comments on the interim final rule must be submitted on or before August 29, 2016.

Attorneys

Lindsay Simmons