FALSE CLAIMS ACT PENALTIES DOUBLE

There are lots of ways a False Claims Act (FCA) case can cost your company money.  One of them effectively doubled last week as the Department of Justice issued a new rule that substantially increases the per-invoice fine the agency can impose.  Submit a false invoice?  The per-incident fine, alone, can now be over $20,000 a pop.  The previous high-end had been $11,000, but DOJ had not increased that level in some time and believed that an increase was necessary.  The agency is supposed to increase FCA fines periodically under the law, but had not done so in several years.  The move comes at a time when GSA is seeking to reduce contractor FCA exposure by eliminating the Basis of Award trigger of the Price Reductions Clause.  Contractors should note, however, that most Schedules related FCA cases are not based on this trigger, but on the defective data portion of the law that allows DOJ to assess penalties all the way back to whenever there was an allegation that your firm submitted incomplete or inaccurate commercial sales information.  If your company invoiced government agencies only 100 times per-year for five years, the new potential claim-based liability is as high as $10.8 million, and that’s before the FCA’s treble damages provisions kick in.  The bottom line is that contractors need to take compliance seriously or DOJ will seriously seek to take your money back.