Labs Face Nearly Doubled FCA Penalties under DOJ’s Interim Final Rule

On June 30 the Department of Justice (DOJ) published an Interim Final Rule in the Federal Register that has significant ramifications for enforcement under the False Claims Act (FCA). Pursuant to the Bipartisan Budget Act of 2015, the DOJ adjusted for inflation the amount of civil monetary penalties that can be imposed for violations of laws enforced by the DOJ.

The new penalties for violations of the FCA were nearly doubled by this adjustment. The current penalty range for FCA violations is a minimum of $5,500 and maximum of $11,000. Under the adjustments, those rates will increase to $10,781 and $21,563, respectively.

The FCA provides that those who violate the Act can be liable for a penalty between $5,000 and $10,000 as adjusted by the Federal Civil Penalties Inflation Adjustment Act plus three times the amount of damages the Government suffers due to the violation. The court does have the ability to reduce damages to “not less than 2 times the amount of damages” the Government suffers.

The interim final rule is effective Aug. 1, 2016, but written comments can be submitted until Aug. 29, 2016. The new penalty amounts can be imposed only for penalties assessed after the Aug. 1 effective date for violations that occurred after Nov. 2, 2015. Penalties for violations occurring on or before Nov. 2, 2015 are subject to the prior rates.

Takeaway: The cost of noncompliance just increased for labs and all health care providers.

Editor’s Note: To learn about how your laboratory can avoid false claims liability, see G2 Intelligence’s report, Lab Compliance Essentials 2017: Managing Medicare Fraud & Abuse Liability Risk, released July 2016. This report provides a practical, plain-language guide to protecting labs against false claims, Anti-Kickback Statute and Stark Law violations and discusses the latest enforcement cases involving and affecting lab compliance.