Life Science Compliance Update

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February 06, 2017

Department of Justice Increases FCA Civil Penalties, Again

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On February 3, 2017, the Department of Justice (DOJ) announced that False Claims Act (FCA) penalties will once again be increasing, effective immediately. Pursuant to the 2015 budget bill, which requires annual re-indexing of FCA penalties for inflation, the minimum per-claim penalty will increase from $10,781 to $10,957 (it jumped from $5,500 to $10,781 last year). The maximum per claim penalty will increase to $21,916 (after jumping from $11,000 to $21,563 last year). The penalties will continue to be adjusted each year to reflect changes in the inflation rate, required to be done no later than January 15th of every year. Each agency is to publish regulations in the Federal Register that note the adjustment of civil monetary penalties (CMP) within its jurisdiction.

As we have previously written about in our sister publication, Life Science Compliance Update, the Bipartisan Budget Act of 2015 requires all federal agencies to increase the civil monetary penalties within their purview, an annual “cost-of-living-adjustment.” Prior to last year, the last time FCA penalties were adjusted was in 1986.

The cost-of-living adjustment is the percentage (if any) for each CMP by which the Consumer Price Index (CPI) for the month of October preceding the date of the adjustment (January 15) exceeds the CPI for the month of October in the previous calendar year.

These increases apply to any FCA penalties assessed, starting last Friday, for FCA violations that occurred on or after November 2, 2015. Violations that occurred from November 3, 2015 to February 2, 2017, will be assessed at last year’s rates. For any violations that occurred prior to November 2, 2015, the $5,500-$11,000 penalty range still applies.

While many predicted that the previous increase in FCA civil penalties created a situation ripe for constitutional challenges, we have not seen that play out. While this year’s increase is smaller than last year’s (i.e., doesn’t almost double from one year to the next), it is certainly still possible to see some court action on this move.  

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