Today the Department of Justice published an interim final rule with request for comments that applies an inflation adjustment to civil monetary penalty (CMP) amounts assessed by the Department, as mandated by the Bipartisan Budget Act of 2015. Notably, the new maximum CMP for False Claims Act (FCA) violations under 31 U.S.C. 3729(a) is $21,563, up from $11,000 (the minimum FCA CMP under the rule is $10,781). The adjusted CMPs are applicable to civil penalties assessed after August 1, 2016 whose associated violations occurred after November 2, 2015 (the date of enactment of the 2015 Amendments). The DOJ will accept comments on the rule through August 29, 2016.
The DOJ acknowledges that the statute authorizes it to increase a civil penalty by less than the otherwise required amount in certain circumstances, but “the Department is not invoking that authority in this rule,” contending that its amended penalties “are calculated pursuant to the statutory formula.” Nevertheless, an argument will likely be made that the new CMPs are prima facie excessive compared to the actual per-claim damages in many FCA cases, raising doubts about their enforceability and constitutionality. No doubt some other commentators will argue that the increased penalties give the Department of Justice a more powerful weapon when prosecuting FCA cases, and may result in even greater governmental leverage with respect to FCA-related settlement discussions with providers, suppliers, and manufacturers. Instead, we think this is just “piling on” when the current penalties (and damages provisions) were more than sufficient.