False Claims Act penalties set to nearly double

Penalties under the False Claims Act presently range from $5,500 to $11,000 per claim. However, that range could nearly double in coming months.

Signed into law by President Barack Obama last November, the Bipartisan Budget Act of 2015 requires that federal agencies increase civil monetary penalties awardable under the False Claims Act. One of the law's provisions includes a "catch up adjustment," which requires agencies to update penalties to account for inflation. The initial adjustment would be implemented through interim final rulemaking, like that recently promulgated by the Railroad Retirement Board.

On May 2, the Railroad Retirement Board published an interim final rule, raising the penalties authorized by the False Claims Act to a range of $10,781 to $21,563. The increased penalties would apply to claims made on or after Aug. 1, 2016, and before Jan. 1, 2017. For claims made on or after Jan. 1, 2017, the range of False Claims Act penalties will be the larger of either the amounts specified for the previous year ($10,781 to $21,563) or the amounts from the previous year further adjusted for inflation.

Significantly increasing the False Claims Act penalties available has obvious, and not-so-obvious, ramifications, according to Jason Drori, lawyer at Foley & Lardner, who wrote on the topic for the firm's blog.

"Rising penalties, of course, magnify the liability risk for all government contractors, including a disproportionately large number of healthcare providers," wrote Mr. Drori. "The added risk may prompt healthcare providers to scale back the services provided to beneficiaries of one or more federal health programs, which would have a negative impact on beneficiaries' access to care."

According to the National Law Review, False Claims Act penalties have not been adjusted for inflation since 1996.

The Railroad Retirement Board is accepting comments on the interim final rule until July 1.

More articles on the False Claims Act:

5 False Claims Act trends, cases that will fuel recoveries in 2016
6 striking statistics on False Claims Act enforcement in healthcare

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