U.S. District Court Rejects $50.2M Civil Penalty In False Claims Act Case

Feb 22, 2012   

Discussing the constitutionality of civil penalties under the False Claims Act (“FCA”), a federal district judge in the Eastern District of Virginia has refused to impose a $50.2 million fine against a company for its fraudulent conduct.

Last summer, a jury found the company liable on two claims, including a government claim for which the company had already paid hundreds of thousands of dollars in a 2003 antitrust case. After the jury made its finding, the government asked the Federal District Court to impose a $24 million civil penalty, instead of the $50.2 million civil penalty mandated by the FCA.  The government took the position that it was “exercising their prosecutorial discretion” in asking for a lesser amount than the $50.2 million, and argued that the $24 million penalty was “unquestionably within the constitutional limit of the Excessive Fines Clause of the Eighth Amendment.” The U.S. District Court, according to the government, had no authority to reduce the number civil penalties below the amount the statute required.

The Court based its decision to award no civil penalty on two factors. First, the Court ruled that the penalty required by the statute was “grossly disproportionate” to allegations that the company defrauded the government.  The Court also ruled that it lacked the power to create a penalty other than the one permitted by statute: “The court is driven to its conclusion that it must simply refuse to enforce the mandated penalty after finding it unconstitutional under the facts of this case, and not substitute its own fashioned penalty, in large part due to the structure and language of the FCA itself.” The Court further wrote that it was unwilling “to rewrite the FCA, as given to this court, in order to fashion a constitutional civil penalty under the facts of this case.”

A full copy of the opinion is available here.

The attorneys at Fuerst Ittleman have extensive experience litigating against the government regarding the False Claims Act.  You can reach an attorney by emailing us at  contact@fidjlaw.com or by calling us at 305.350.5690.