Feb 132024

DOJ Announces 2024 Inflationary Adjustments to FCA Penalties

Scott D. Stein and Catherine Stewart

The Department of Justice has published the inflationary adjustments to the civil monetary penalties associated with False Claims Act violations that will go into effect on February 12, 2024. The new penalties will align with the penalties announced by the Department of Commerce last month (discussed here). For any violations that occurred after November 2, 2015, but that are assessed after February 12, 2024, the adjusted penalties will be applied. The minimum False Claims Act penalty will increase from $13,508 to $13,946 per claim, and the maximum penalty will increase from $27,018 to $27,894 per claim.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Scott D. Stein

Chicago

sstein@sidley.com

Catherine Stewart

Chicago

cstewart@sidley.com

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2024 Inflationary Adjustments to FCA Penalties Announced

The Department of Commerce (“Commerce”) has published the inflationary adjustments to civil monetary penalties associated with False Claims Act violations that went effect January 15, 2024.  As we previously reported, the 2015 Balanced Budget Act provides for federal agencies to make inflationary adjustments to civil monetary each year to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index (“CPI”), which measures the change between the prices urban consumers pay for a market basket of consumer goods and services.  The 2024 civil monetary penalties adjustment was calculated using the percentage of change between the October 2022 CPI and the October 2023 CPI.  The adjusted penalties will be assessed for violations that occurred prior to the adjustment, but are assessed after January 15, 2024.  The minimum False Claims Act penalty has increased from $13,508 to $13,946 per claim and the maximum penalty has increased from $27,018 to $27,894 per claim.

DOJ Announces Increases to FCA Penalties Due to Inflationary Adjustments

On January 30, 2023, the Department of Justice published new inflationary adjustments to the False Claims Act’s civil monetary penalties.  Under the Balanced Budget Act of 2015, inflationary adjustments are based on the Bureau of Labor Statistics’ Consumer Price Index and are required to occur annually by January 15.  However, this most recent increase takes effect only eight months after the last adjustment. Since December 2021, CMP inflationary increases have occurred more frequently than in years prior, as DOJ likely tries to capitalize on the rising inflation rates to secure higher penalties.  The revised penalties will be assessed for violations that occurred prior to the adjustment, but that are assessed after January 30, 2023.  As of January 30, 2023, the minimum False Claims Act penalty increased from $12,537 to $13,508 per claim.  The maximum penalty has increased from $25,076 to $27,018 per claim (see here).