Increased penalties: the False Claims Act obtains a more powerful bite

posted on:
May 25, 2016

author:
Staff

Taxpayers and whistleblowers rejoiced earlier this month following the United States Department of Justice (DOJ) announcement of increased penalties under the federal False Claims Act.

The False Claims Act is a powerful tool in the government’s war against fraud. The False Claims Act incentivizes integrity by empowering ordinary citizens to blow the whistle on fraud committed against the United States government.

The text of the False Claims Act provided for penalties not less than $5,000 and not more than $10,000. The Department of Justice later increased that range to $5,500 to $11,000, and now the range has been adjusted once again.

On Monday, May 2, 2016, the Department of Justice published the new penalty range for False Claims Act violations, which now provides for penalties not less than $10,781 and not more than $21,563. This new increase takes effect on Aug. 1, 2016, and will last until Jan. 1, 2017. After Jan. 1, 2017, the penalties are indexed to increase annually to keep pace with inflation. These new penalties will be published in the Federal Register on an annual basis on or before Jan. 15 of each calendar year.

Beasley Allen principal Archie Grubb lauded the increased penalties: “The False Claims Act is like a watchdog against fraud, and the penalties are the teeth. With these long-overdue penalty increases, the teeth are now twice as sharp as before.”

These new penalties serve to protect citizens and the government in three ways:

First, there is a correlation between penalties and the tax pool. When an unscrupulous person or corporation defrauds the government, they steal from our tax pool. They are depleting monies gathered to fund our health care, our defense, and other benefits our tax dollars afford us. Higher penalties for committing fraud help replenish the tax pool.

Second, these new penalties deter others from committing fraud against the government. Fraudulent acts committed many times over, such as improper billing, coding, or documenting of medical procedures, may result in penalties in the millions of dollars.

Third, the False Claims Act provides incentives for citizens to step forward and blow the whistle on fraud. These incentives include 15 to 30 percent of the funds recovered by the government. Larger penalties equal larger rewards for whistleblowers. These larger rewards will incentive whistleblowers to remain vigilant, which is a win-win situation for taxpayers and the government. Whistleblowers receive larger rewards while the tax pool is more adequately recompensed.

Are you aware of fraud being committed against the federal government, or a state government? If so, the False Claims Act and other laws can protect and reward you for doing the right thing by reporting the fraud.

If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Sources:
20 C.F.R. § 356.3
31 U.S.C. § 3729
31 U.S.C. § 3730

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