In a little-noticed development, on February 3, 2017, the Department of Justice (DOJ) increased the per-claim range of penalties under the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) for the second successive year, in accordance with a statutory requirement issued under the Bipartisan Budget Act of 2015. As a result, FCA defendants are now subject to monetary penalties ranging from $10,957 to $21,916 per claim submitted in violation of the FCA.

Section 701 of the Bipartisan Budget Act of 2015 revised federal requirements for determination of civil monetary penalties by federal agencies, including substituting a new statutory formula for calculating inflation adjustments annually. In response, on June 30, 2016, the DOJ issued an interim final rule with a request for comments to adjust civil monetary penalties assessed by DOJ for inflation. That interim final rule led to a significant increase in the range of per claim FCA penalties because the new formula tied the inflation adjustments to cost of living increases between 2015 and the year in which each civil penalty was established or adjusted by law.  Consequently, the DOJ used the FCA’s per claim penalty range of $5,000 to $10,000 established in 1986 as a baseline, which yielded a considerable increase to a new penalty range of $10,781 to $21,563 per claim in violation of the FCA as of August 1, 2016.On February 3, 2017, the DOJ finalized its interim final rule (and the formula for inflation adjustments), and also published its new range of per claim penalties for violations assessed on or after February 3, 2017 (that occurred on or after November 2, 2015).

The current minimum per claim penalty is now $10,957, and the current maximum per claim penalty is $21,916. These per claim amounts will now be adjusted annually, using a comparison of the cost of living adjustment for each of the two preceding Octobers, rounded to the nearest dollar.

Health care providers and other government contractors now need to anticipate annual increases in the FCA’s per claim penalties – which may be a daunting prospect after a thirty year period in which such penalties were only adjusted once – and to recognize that these adjustments further heighten the importance of FCA compliance.