The False Claims Act (FCA) is a federal law that imposes liability on companies or individuals who defraud governmental programs. Either the government or a private citizen can initiate a suit under the FCA. Depending on the circumstances of the case, whistleblowers who provide information that leads to the government recovering money stand to collect awards ranging from 15 to 30% of the total recovery.
On June 30, 2016, the Department of Justice (DOJ) passed an interim final rule that doubled the penalties that can be imposed in FCA cases. Currently, FCA penalties range from $5,500 (minimum) to $11,000 (maximum) per claim. Under the new regulations, the penalty amounts will now range from $10,781.40 (minimum) to $21,562.80 (maximum) per claim. FCA cases often involve multiple claims, which means that the new per-claim penalties could significantly increase the total amounts recovered.
The new penalties are to take effect on August 1, 2016, and will apply to all false claims that were submitted after November 2, 2015. The new penalty figures are much higher than the increases many had predicted.
The DOJ’s announcement comes on the heels of a similar recent action by the Railroad Retirement Board, a relatively obscure agency that occasionally sees FCA cases. On May 2, 2016, that agency announced that it would be doubling FCA penalties in accordance with the Bipartisan Budget Act of 2015, which required all agencies to implement adjustments to account for inflation.
FCA penalties had not seen an increase since 1996, under the Debt Collection Improvement Act of 1996. While some thought the new increases would be based on inflation since 1996, the Railroad Retirement Board disregarded the 1996 increase, finding that the Budget Act required penalties to be adjusted based on inflation since 1986.
The penalty increases also have big implications for FCA whistleblowers. Because whistleblower penalty amounts are directly based on the amounts recovered by the government in a given case, reflecting a percentage of those recoveries, when the recoveries increase, so do the awards. Under the recent DOJ interim final rule, when FCA penalties double, the amount of the whistleblower award based on those penalties also doubles. This is in addition to a percentage of whatever other recoveries the government collects.
The newly increased penalties will continue to see gradual increases over time, as they are required to be readjusted for inflation on an annual basis. With higher potential awards on the line, whistleblowers now have more incentive to come forward when they have knowledge of government fraud.
Consult an Experienced False Claims Act Attorney
Whistleblowing is stressful business. At Kreindler & Associates, we understand that the decision to stand up for what is right can be a difficult one. The good news is, you don’t have to go it alone.
Our experienced whistleblower attorneys are here to guide you through the process and ensure that your rights are protected. The experienced False Claim Act attorneys at Kreindler and Associates have over 15 years assisting courageous whistleblowers with the daunting task of bringing fraud to light. If you have evidence of government fraud or questions about becoming a whistleblower, contact us today.
