Kusserow on Compliance: Reminder—False Claims Act penalties are increasing next month

Last year, Congress enacted legislation modifying the False Claims Act (FCA) to add incentives to “Whistleblowers” and provide added deterrence to those who would violate law by increasing financial penalties.  The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, passed as part of the Bipartisan Budget Act of 2015 (P.L. 114-74), requires the Department of Justice (DOJ) to increase FCA penalties to annually account for inflation, raising penalties. The DOJ last raised civil monetary penalties under the FCA to their current levels in August 1999, increasing the minimum penalty from $5,000 to $5,500, and increasing the maximum penalty from $10,000 to $11,000. This increase was consistent with the maximum 10 percent increase provided for in the 1996 Debt Collection Improvement Act.  The $11,000 per claim penalty represents the maximum penalty permissible under prior law—exactly double the $5,500 per claim minimum penalty.  Under the new legislation now going into effect, this will increase next month, and the change will bump the minimum penalty for a FCA from $5,500 to $10,781 and increase the maximum penalty from $11,000 to $21,563. One of the provisions of the legislation is requiring the federal government to increase civil monetary penalties as a “catch up adjustment,” which requires agencies to update penalties to account for inflation. The initial adjustment would be implemented through rulemaking.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.