Penalties Under the False Claims Act Have Risen for the Second Time Within the Last 12 Months

• For false claims or statements made after October 23, 1996 but before August 1, 2016, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $5,500 and the maximum penalty is $11,000, per false claim statement.
• For false claims or statements made on or after August 1, 2016, but before February 3, 2017, the maximum penalty which may be assessed under 31 U.S.C. 3729 is $10,781 and the maximum penalty is $21,563 per false claim or statement.

Although the amount of civil penalties assessed in False Claims Act cases almost doubled in August 2016, additional increases were recently announced. On February 3, 2017, the DOJ issued a Final Rule further adjusting the amount of civil monetary penalties that may be assessed under the False Claims Act to account for inflation. For false claims or statements made after February 3, 2017, the minimum penalty which may be assessed under 31 U.S. C. 3729 is $10,957 and the maximum penalty is $21, 916 per false claim or statement.

In today's health care billing environment, where the number of electronic claims submitted to Medicare can be significant, the potential penalties an organization could face for the submission of false claims can add up quickly. In light of the increases in penalty amounts implemented in August 2016 and in February 2017, we should expect to see future challenges under the Eighth Amendment of the Constitution. As you will recall, the Eighth Amendment prohibits the imposition of "excessive fines", or fines that are grossly disproportional to the gravity of an offense.