False Claims Act Penalties for Fraud, Misconduct & Abuse of Government Programs

Fraud, Misconduct & Abuse of Government Programs is Inevitable: So What Are The Penalties for Violations?

You must understand the False Claims Act (FCA) if you own or manage a business that works with federal funds.

Medical providers who work with federal programs are particularly vulnerable to running afoul of this law, and the consequences can be severe.

If you violate the FCA, you may be responsible for paying millions of dollars in fines. You may also face other serious penalties.

As a whistleblower, you may be sitting on information and deciding wondering what protections it provides.

Protect yourself by learning about the FCA, the violations that create liability, and the penalties that apply.

The FCA is an anti-fraud law that dates back to the American Civil War. It introduced enhanced penalties for anyone who committed fraud against the US government by misusing federal funds.

The original law targeted contractors of the federal government who provided substandard supplies to Union soldiers. The law still applies to military contractors, but today, it targets fraud against the government in many industries.

Medicare, Medicaid, and other programs distribute trillions of dollars in federal funds every year and are frequently targeted by fraud schemes. Whistleblowers can learn more about Medicare fraud here.

Any person who knowingly submits a false claim to the government may be liable for the penalties described by the law. The law has been expanded over time to cover most types of contractors who interact with the federal government, including:

• Hospitals
• Laboratories
• Pharmaceutical manufacturers
• Medical device manufacturers
• Nursing homes
• US military food suppliers
• Vehicle and equipment manufacturers

The FCA includes provisions that set the fines for each violation. The penalties have been amended several times to account for inflation and to target new types of fraud schemes. If you violate the FCA, you may be held responsible for:

• Federal damages: Violators may be sentenced to pay fines to cover any losses that occur because of false invoices or fraud schemes. This amount of this fine will vary depending on how much money was fraudulently taken.
• Civil penalties: In addition to losses, violators may be sentenced to pay a fine for each false invoice submitted. Large-scale fraud may result in fines that reach into the millions of dollars.

The history of FCA Penalties

The False Claims Act started with strong penalties and has been amended several times throughout history to enhance those penalties or clarify violations. The 1986 amendments to the FCA and the introduction of the Federal civil penalties inflation adjust act, played the largest role in changing fines.

• The False Claims Act: The original act set penalties at double the damages to the federal government, plus another penalty of $2000 for each individual false claim.
• The 1986 Amendments to the FCA: The FCA was amended in 1986 to penalize contracting and procurement fraud more severely. The amendment increased the damages and introduced an enhanced civil penalty for each false invoice that was submitted. The civil penalties were set at:
• $5000 minimum per violation
• $10,000 maximum per violation

 

• Federal Civil Penalties Inflation Adjustment Act of 1990: This act, which is independent of the FCA, increased all federal penalties based on a formula that accounts for inflation. As a result of this law, all FCA civil penalties are increased once-per-year.
• January 2020 updated rates: As required by the Civil Penalties Adjustment Act, each violation’s civil fines were increased on January 3rd. The Department of Commerce declared new rates for FCA-related penalties to be:
• $11,463 minimum per violation
• $23,331 maximum per violation