DOJ Announces 2024 Inflationary Adjustments to FCA Penalties
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.
Court Cuts False Claims Act Jury Verdict in Half in Rare Constitutional Decision
On Thursday, a Minnesota district court judge more than halved a $490 million False Claims Act jury verdict against an ophthalmology distributor and its founder for Anti-Kickback Statute (“AKS”) violations, to $217 million, holding the damages were “notably severe” and “grossly disproportional” to the offense, and thus improper under the Excessive Fines Clause.
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).
Inflationary Adjustments to Civil Monetary Penalties Take Effect Less than Six Months After the Last Increase
This week the Department of Justice (“DOJ”) published inflationary adjustments to civil monetary penalties. This increase takes effect less than six months after the last increase and indicates that DOJ is eager to return to a more regular cadence after a period of less frequent inflationary adjustments (see here). DOJ is likely eager to implement penalties that reflect the rising inflation rate, which is currently at a forty-year record high. As we previously reported, the 2015 Balanced Budget Act (BBA) provides for federal agencies to make inflationary adjustments to civil monetary penalties on January 15 of each year to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index. After an inflationary update in January 2018, only two updates have occurred until now: an update in June 2020 and a recent update in December 2021. The revised penalties will be assessed for violations that occurred prior to the adjustment, but are assessed after May 9, 2022. As of May 9, 2022, the minimum False Claims Act penalty of $11,803 has increased to $12,537 per claim. The maximum penalty has increased from $23,607 to $25,076 per claim.