Fraud penalties for healthcare providers and others will nearly double per false claim starting Monday.
The U.S. Justice Department is raising the amount in response to the Bipartisan Budget Act of 2015, which required civil monetary penalties to increase by August 2016 to account for inflation.
Penalties for each false claim submitted to programs such as Medicare will swell to a minimum of $10,781 from a current minimum of $5,500. The maximum will go up to $21,563 per false claim from a current maximum of $11,000. False Claims Act cases often involve thousands of claims, meaning those penalties can add up to millions and even billions of dollars in a single case.
Legal experts, however, say providers shouldn't panic. “It doesn't necessarily change the playing field that much in terms of what companies should already be doing in terms of compliance, but it just increases the government's and potentially private litigant's leverage enough that the False Claims Act should continue to be a huge priority for companies,” said Laura Hammargren, a partner at Mayer Brown who represents healthcare companies.
Those involved in False Claims Act cases often don't end up directly paying the penalties because cases are often settled. Providers don't want to risk having to pay the already-large penalties in addition to triple damages.
Even in settlements, however, the new penalties might lead to higher payouts because the starting numbers for settlement discussions will be larger, Hammargren said.
But some say settlement amounts are often based on damages, or the government's actual losses, not penalties.
Also, the government might not want to pursue full penalties in cases against providers so as to avoid raising constitutional issues. The Eighth Amendment of the U.S. Constitution bars excessive fines.