As expected, DOJ has issued its annual inflation adjustment to FCA penalties. Following the Department of Commerce’s lead from two weeks ago, DOJ has increased FCA penalties by about 2% from between $10,957 and $21,916 to between $11,181 and $22,363.

Once again, DOJ has made the adjusted penalties retroactive to violations of the FCA that occurred after November 2, 2015. That means that for defendants under investigation by or negotiating with DOJ, or litigating against DOJ or relators, about conduct that occurred after November 2, 2015, the potential FCA penalties have just ratcheted upward. One potential limitation to the retroactivity provision is that if the penalty is “assessed” by the district court before this rule’s effective date (early next week when it is formally published in the Federal Register), then the adjustment would not increase the assessed penalty while the defendant appealed the district court’s judgment.

Last year we suggested that DOJ’s retroactive penalty increases would invite constitutional, statutory, and administrative law challenges. So far we have not seen decisions on the issue. We will continue to watch for defendants to raise these objections.