False Claims Penalties Could Double to ‘Eye-Popping’ Figures

Penalties under the False Claims Act (FCA) are set to nearly double to “eye-popping” numbers, if a proposed regulation becomes effective.

The penalty hikes could help discourage home health companies and other health care providers from committing Medicare fraud. However, providers may argue that current penalty levels are already sufficiently punitive, furthering the ongoing discussion over whether they already face too many frivolous FCA issues.

Minimum penalties would increase to $10,781, up from $5,500 per penalty. Maximum penalties would increase to $21,563, up from $11,000, Law 360 reported.

The jump in penalties was expected, as the limits had not been updated by the DOJ since 1996. A recent Congressional committee hearing also debated the whether health care companies should see lower penalties when they self-disclose false claims.

“Frankly, I was surprised,” Scott Stein, a partner at business law firm Sidley Austin LLP, told Law 360. “It’s crazy. The new dollars are eye-popping.”

For the fiscal year 2015, the Justice Department recovered more than $3.5 billion from False Claims Act cases. From January 2009 to the end of 2015, the Department has recovered nearly $16.5 billion in health care fraud across different health care providers, restoring billions to federally funded programs including Medicare and Medicaid. The largest ever home health care fraud case to date is marked at a $375 million scheme in Texas.

The new penalty limits may challenge excessive damages prohibited under the Eighth Amendment and could lead to more businesses appealing decisions in fraudulent billing cases, according to Law 360. Or, it could lead to more companies settling.

The proposed rule came from the Railroad Retirement Board, an agency that is sometimes involved with FCA cases. The RRB became the first federal agency to adjust penalty limits, in accordance with Congress’ budget deal last year. Other federal agencies are expected to publish similar penalty adjustments, according to Law 360. The final rule will likely be published by the Department of Justice by July 1 and could become effective as early as August 1.

Written by Amy Baxter