Penalties Under the False Claims Act Double as of August 1, 2016

The False Claims Act (“FCA”), which is commonly referred to as “Lincoln’s Law,” was originally enacted in 1863, during the Civil War. The FCA was enacted to fight rampant fraud against the Federal Government and Union troops.

The FCA imposes liability on individuals and companies who defraud governmental programs. The FCA’s “qui tam” provisions allow private citizen whistleblowers (“relators”) to sue on behalf of the United States and share in its recovery. Specifically, whistleblowers allege fraud on behalf of the federal government and receive a percentage of the monetary recovery for their efforts and information.

The United States Department of Justice (“DOJ”) published an Interim Final Rule on June 30th nearly doubling the per-claim civil penalties for violations of a number of laws, including the FCA. Prior to the enactment of the DOJ’s Interim Final Rule, the civil penalties under the False Claims Act were between $5,500 to $11,000 per claim, plus three times the amount of damages, which the federal government sustains because of the false claim. Now, the False Claims Act civil penalties have been increased to between $10,781.40 and $21,562.80 per claim, plus three times the amount of damages that the federal government sustains because of the false claim.

The DOJ’s Interim Final Rule, which invites public comment, specifies that the increased penalties will take effect on August 1, 2016, and will apply to violations that occurred after November 2, 2015

The full impact of the penalty increases remains to be seen. However, the increase in penalties could provide more incentive for relators to bring qui tam actions. Under the FCA, whistleblowers can receive between 15 to 25 percent of the amount recovered in an action if the government chooses to intervene in the lawsuit, and between 25 to 30 percent of the proceeds if the government does not intervene.

Please contact Davidson Law Group, P.A. for more information about the False Claims Act.