Court Refuses to Reduce $290 Million FCA Judgment, Finding Damages and Penalties Assessed To Be Constitutionality Appropriate

We have previously reported on two district court decisions from Minnesota and Texas analyzing FCA damages and penalties under the Eighth Amendment Excessive Fines Clause, with both courts finding the amounts awarded exceeded the amount permitted by the U.S. Constitution. In U.S. ex rel. Behnke v. CVS Caremark Corp. et al., No. 14-cv-824 (E.D. Pa. Aug. 19, 2025), the court engaged in a similar analysis but came out the other way, rejecting the defendant’s constitutional argument and entering a final judgment of $289,873,500.

As background, following an eight-day bench trial, the court determined that the government had sustained $95 million in actual damages as a result of the defendant’s conduct. Pursuant to the FCA’s treble damages provision, the court awarded an additional $190 million, bringing the total award to $285 million. The court then turned to assessing civil penalties. Finding that the defendant’s “misconduct was serious” but that the relator had not established the defendant acted with “actual knowledge,” the court decided to award $9,500 per false claim, which was at the higher end of the statutorily prescribed range ($5,500 to $11,000). Multiplying that amount times the 513 claims at issue, the court awarded $4,873,500 in penalties, bringing the total judgment to $289,873,500. The defendant argued that the combined award violated the Eighth Amendment’s Excessive Fines Clause and the Due Process Clause.

The court evaluated the defendant’s Eighth Amendment challenge by examining the following: “(a) the essence of the defendant’s crime and its relationship to other criminal activity; (b) whether the defendant was within the class of people for whom the statute of conviction was principally designed; (c) the maximum sentence, including the fine that could have been imposed; and (d) the nature of the harm resulting from the defendant’s conduct.” Id. at 9. Based on these factors, the court determined that the judgment did not run afoul of the Excessive Fines Clause.

With regard to the first factor, the court emphasized that the conduct at issue “was not simply some failure to report” and that the fraudulent scheme defendant instituted was “financially motivated” and concealed from regulators time and again. For the second factor, the court determined that the defendant was in the relevant class of people because the defendant’s fraudulent conduct was the type the FCA was designed to prevent. Id. at 10. For the third factor, the court emphasized that the penalty amount could not be considered disproportionate to the gravity of the offense as it was “within the range set by Congress,” and “the number of false claims—513—understated the extent of” the defendant’s conduct. Finally, with respect to the fourth factor, the court noted that, apart from the overbilling itself, the defendant’s actions harmed the United States by eroding public confidence in the government. Id.

The court next evaluated the defendant’s Due Process Clause challenge by examining three factors: (1) the reprehensibility of the defendant’s conduct; (2) the disparity between actual harm and the damages award; and (3) how the award compared to penalties in similar cases. Emphasizing that the fraud was “significant” and supported the penalties imposed, the court highlighted that the roughly 2:1 ratio of trebled damages and civil penalties to actual damages was well below ratios upheld by district courts both within the circuit and elsewhere (4:1, 10:1, and 3.6:1). Thus the court concluded that the judgment comported with the Due Process Clause.

This decision, a copy of which can be found here, highlights an ongoing tension in FCA jurisprudence between ensuring damages and penalties deter and punish fraud and avoiding disproportionate awards that risk eclipsing actual damages.

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