False Claims Act penalties to double, feds say

False Claims Act penalties are set to increase on Aug. 1, for any false claims submitted after Nov. 2, 2015
False Claims Act penalties are set to increase on Aug. 1, for any false claims submitted after Nov. 2, 2015

Penalties for False Claims Act violations will nearly double over the next month in response to a rule from an obscure federal agency, the U.S. Department of Justice announced Wednesday.

The penalty spike has been on the horizon since May, when the U.S. Railroad Retirement Board — a government body that administers retirement, unemployment and sickness benefits for railroad workers and their families — published a rule increasing FCA penalties.

Various healthcare providers — including several notable long-term care-related groups — have been targets of FCA complaints recently. It would not be unreasonable to expect more to follow.

In the rule published in the Federal Register this week, the DOJ confirmed that the penalties will increase. Minimum penalties will jump from $5,500 to $10,781 per claim, while maximum penalties will go from $11,000 per claim to $21,563.

The DOJ does have authority to implement smaller increases if it appears that the full changes would have “a negative economic impact,” but the agency said it has no plans to use that authority with this rule, Law360 reported. The changes will go into effect on Aug.1, and apply to any violations made after Nov. 2, 2015.

The Board's penalty revisions reflect a provision of the Bipartisan Budget Act of 2015 that requires all federal agencies to raise their penalty levels to account for inflation.

The penalty increase marks the first time False Claims Penalties have increased in 20 years, a fact that could ramp up pressure on providers involved in current false claims cases. Those types of cases can grow to include hundreds, or even thousands, or allegedly false claims, each of which could carry individual penalties.