DOJ Continues to Increase False Claims Act Penalties

The False Claims Act (FCA) generally provides that any person who knowingly submits a false claim to the government is liable for triple the government’s damages plus a penalty for each violation. Over recent years, the Department of Justice (DOJ) has gradually increased the penalty for each violation of the FCA, apparently owing to inflation. As the penalty accrues for each violation of the Act, penalties can run into the millions of dollars, as each improper invoice or certification can, in certain circumstances, count as a distinct violation. In 2019 alone, the DOJ recovered over $3 billion in judgments and settlements from civil cases involving fraud and false claims against the government.

For reference, the law as enacted in 1986 set penalties at $5,000 to $10,000 per violation but the Act has since been amended to permit federal agencies to update penalties annually.

While the penalties were not adjusted in 2019, on June 19, 2020, the Department of Justice published its final rule adjusting for inflation the civil monetary penalties assessed with various laws, including the FCA. This new rule increases the previous minimum penalty from $11,181 per violation to $11,665 per violation. Likewise, it increases the maximum penalty from $22,363 to $23,331 per violation. This new amount applies to all violations occurring on or before November 2, 2015 and not yet assessed.

Given the weighty penalties for each violation of the FCA, it is even more important that contractors are paying close attention to the invoices and certifications it submits to the government. We have previously written about the heightened enforcement risks and audits that are likely to follow from the current economic stimulus plans and agency flexibility in place during the pandemic. Thus, it is even more imperative that contractors closely monitor their submissions in this unprecedented time.