New Department of Justice and Department of Labor Regulations Increase Monetary Penalties for False Claims Act, Anti-Kickback Act and OSHA Violations

Federal agencies are increasing civil monetary penalties for the violation of numerous federal laws for the first time since the 1990’s.[1] Of particular concern to government contractors are recent interim final rule changes issued by the U.S. Departments of Justice (“DOJ”) and Labor (“DOL”) that have increased the maximum penalties for violation of the False Claims Act and Anti-Kickback Act by a whopping 96%, and increased the maximum penalties for certain OSHA violations by an equally astounding 78%. The changes are effective August 1, 2016. DOJ and DOL have applied these substantial “catch up adjustments” to civil penalties based on
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New Regulation Results In Doubling Up False Claims Act Penalties

While many corporations in the federal contracting arena have been expecting regulations to further limit Federal False Claims Act (FCA) liability, those expectations have been called into question by a new federal regulation released last week aimed at doubling False Claims Act penalties. Raised by the obscure Railroad Retirement Board, which infrequently generates FCA cases involving fraudulent benefit claims, the board issued a ruling adjusting penalties. Under the new rule, minimum per claim penalties would jump from $5,000 to $10,781, and maximum per-claim penalties would rise from $11,000 to $21,563. We can anticipate a similar increase from the U.S. Department
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Ninth Circuit Loosens the False Claims Act Original Source Requirement for Whistleblowers

In an en banc decision filed July 7, 2015, the Ninth Circuit reversed the district court’s original dismissal of consolidated qui tam suits brought by whistleblowers, alleging that their former employer, Kinetic Concepts, Inc., had fraudulently claimed reimbursements from Medicare. See US ex rel. Hartpence v. Kinetic Concepts, Inc. (12-55396) and US ex rel. Godecke v. Kinetic Concepts, Inc. (12-56117). The Court held that there are now only two requirements in order for a whistleblower to be an “original source” who may recover under the False Claims Act (FCA): (1) before filing the action, the whistleblower must voluntarily inform the
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Rethinking Expressly Unallowable Costs: What the Defense Contract Audit Agency’s Guidelines Mean for Federal Contractors

The auditors for the Defense Contract Audit Agency (DCAA) received additional guidance from DCAA further defining and focusing on the identification of expressly unallowable costs and the recovery of penalties for those unallowable costs. Federal contractors should consider this guidance carefully; what the DCAA instructs its auditors regarding unallowable costs will directly impact contractors that are the subject of the DCAA auditor’s review. On December 18, 2014, DCCA issued MRD 14-PAC-021(R), Audit Alert Distributing a Listing of Cost Principles That Identify Expressly Unallowable Costs.  The guidance contains over 32 pages of cost principle excerpts and directs the DCAA auditor to question
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