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Court gives defendants a tool to fight fines in FCA cases

Think False Claims Act (FCA) damage awards are getting out of hand? You are not alone. The Eleventh Circuit recently agreed to hear a case that questioned whether or not these cases could qualify for relief under the Eighth Amendment protections against excessive fines.

The case that led to the question, Yates v. Pinellas, involved a hematology and oncology lab that the government claimed improperly billed for services. The issue? The government states the lab did not have proper certification to warrant the billing. The court agreed, and the lab was fined $755.54 in actual damages. Due to the fact that the case involved an FCA violation, the court could impose additional, treble damages — and boy did it grab on to this option. The court imposed an additional $5,000 for each of the over 200 violations. This translated to over $1 million in damages.

The defendant felt this was excessive and challenged the award stating it violated the defendant’s rights under the Eighth Amendment.

What is the Eighth Amendment?

The Eight Amendment is likely more well known as the provision that provides protection against cruel and unusual punishments. This amendment is one that keeps the government from abusing its power to punish. In this case, the lab owner argued the amendment’s provision against excessive fines should apply.

How did the court respond to the defendant’s argument?

The court’s holding on this matter required two parts of analysis:

  • Were the damages a “fine” for the purposes of this amendment? Ultimately, the court stated FCA monetary awards qualify as fines for these purposes in these types of cases as the payment was to a sovereign (i.e. the United States) as punishment for an offense.
  • Was the fine excessive? Unfortunately, here the court did not find in favor of the lab. The court stated that the individual fine of $5K was reasonable. The fact that the lab violated the law over 200 times was the problem, leading to the high fine.

Because the lab violated the law so many times, they found the $1M fine “may raise an eyebrow,” but was just.

What does this mean for similar cases?

It is important to point out that this case was a non-intervened case. The government did not intervene in a qui tam case. This could mean that the use of the Eighth Amendment would not find the same success in a qui tam case.

It means that there is the potential to consider use of the Eighth Amendment in certain situations. Whether or not your case qualifies will depend on the details of the case. As such, it is a good idea to have legal counsel review the case and provide guidance.

Attorney John Rivas is responsible for this communication