The False Claims Act has proven to be a steadfast and consistent deterrent of fraudulent behavior by government contractors and those in direct business with government agencies and entities (e.g., healthcare providers). Under the tenets of the FCA, anyone caught submitting false claims for payments could face treble damages, as well as anywhere between $5,000 and $11,000 in fines per violation. For contractors engaging in routine business with the government, the notion of paying millions of dollars to settle claims of fraud is too overwhelming to bear – and many have submitted their opinions as amicus curiae in an upcoming Supreme Court case involving allegations of fraudulent conduct.
Issues Raised by Brief Include Eighth Amendment’s Ban on Excessive Fines
The case awaiting Supreme Court review is known as U.S. ex rel. Bunk v. Gosselin World Wide Moving. In very general terms, this case involved allegations of global price-fixing to the detriment of the United States government – which held several contracts with the corporation. The case wound its way through the federal criminal courts first, and Gosselin faced criminal charges including Conspiracy to Restrain Trade and Conspiracy to Defraud the United States. From there, a False Claims Act case emerged, alleging over 4,000 instances of fraudulent billing. Following a lengthy trial, the District Court found in favor of the plaintiff, but assessed damages against Gosselin for a mere $5,500.
On appeal, plaintiffs urged the Court of Appeals to apply the treble damages clause, as well as assess individual penalties up to $11,000 per violation. The Court obliged, and assessed a new damages amount against Gosselin topping $24 million. Gosselin has appealed the decision to the Supreme Court, arguing that the penalty provisions of the FCA yields unlawfully excessive penalties in violation of the Eighth Amendment.
Several Other Contractors Join With Gosselin
The Supreme Court often accepts briefs from non-parties who are eager to submit their opinion on a controversial matter at hand. These briefs are known as amicus curiae briefs, which literally means “friend of the court.” An amicus brief is usually intended to enlighten the court, provide additional perspective, or advance a novel legal argument for or against a particular issue.
The Gosselin case is certainly no exception, and several entities eager to limit False Claims Act penalties have stepped forward to voice their objections to the treble damages provisions and per-violation imposition of penalties. In a recently-filed amicus brief submitted by the Pharmaceutical Research and Manufacturers Association of America, the U.S. Chamber of Commerce, and the American Hospital Association, these groups advance the following arguments against “excessive” fines and penalties:
- Damages and penalties are calculated “mechanically” by simply multiplying the number of invoices submitted by the assessed fine amount, resulting in “unjustifiably large penalties;”
- Defendants are routinely forced to settle these matters to avoid the further costs of a trial, thereby “frustrating the development of the law” (i.e., case law precedent cannot develop if cases are always settled);
- Lower courts are divided on this issue, making it appropriate for review by the Supreme Court. Awaiting additional decisions out of other Courts of Appeal would cause unnecessary delay;
- Courts across the U.S. are divided in the proper way to calculate False Claims Act penalties. Clear guidance is needed.
Contact a Reputable False Claims Act Attorney Today
If you are aware of fraud under a contract with the U.S. government, we encourage you to contact Berger Montague right away to discuss your case.