Courts May Now Assess FCA Penalties Under Statutory Minimums

Courts may now assess False Claims Act penalties that fall below the statutory minimum, leaving monetary penalties to the discretion of the courts, according to a National Law Review report.

The U.S. Fourth Circuit Court of Appeals in Richmond, Va., overturned a previous decision by the District Court of the Eastern District of Virginia in United States ex rel. Bunk v. Gosselin World Wide Moving, N.V., saying the defendant's minimum penalty under the FCA would be more than $50 million, far exceeding the $3.3 million the government paid for the contested services.

Gosselin, an overseas shipping company based out of Antwerp, Belgium, was accused of allegedly inflating shipping costs across channels and submitting a fraudulent certificate of independent pricing for government reimbursement.

The plaintiff, whistleblower Kurt Bunk, requested a $24 million civil penalty instead of seeking a per-claim penalty, which would have been $50,248,000 from 9,136 false invoices.

The District Court ruled the $50 million was the minimum amount they could penalize Gosselin under FCA rulings, as it had to impose civil penalties on each false claim. The court then determined the $50 million violated the Excessive Fines Clause of the Eighth Amendment and did not award Mr. Bunk anything.  

On appeal, the U.S. Fourth Circuit overturned the District Court's decision and said the court does have the authority to assess FCA penalties below the statutory minimum, and the FCA allows for "unbounded" discretion pertaining to settlement below the statutory minimum. The Fourth Circuit ruled Gosselin had to pay Mr. Bunk's request of $24 million in civil penalties, justifying the amount by saying harm to the government "need not be confined strictly to the economic realm."

Although the case is not related to healthcare, the implications of the new ruling and courts' authorities in determining false claims penalties are certainly applicable to hospitals and health systems dealing with such allegations.

More Articles on the False Claims Act:

Appeals Court Reaffirms FCA Dismissal in Minnesota Hospital
Judge: Halifax Didn't Violate Anti-Kickback Statute With Physician Bonuses
HMA Named in 4 False Claims Actions

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