The Department of Health and Human Services (HHS) and the Department of Justice (DOJ) recently announced some “adjustments” in Civil Monetary Penalties (CMPs) and False Claims Act (FCA) penalties. However, reports indicate that the substantial increase might put government contractors, health care providers, and life science companies at high risk.
The penalties cover several health care violations including the Anti-Kickback Statute, the Stark Law, the Health Insurance Portability and Accountability Act (HIPAA), and the Emergency Medical Treatment and Labor Act (EMTALA). Though HHS and DOJ highlighted that the “adjustments” are aimed to account for the inflation, these adjustments have doubled the FCA penalties and caused the CMPs of Anti-Kickback Statute and Stark Law to approximately increase by fifty percent.
According to the Bipartisan Budget Act of 2015 (Budget Act), Federal agencies were liable to implement inflation adjustments to CMPs by August 1, 2016. Consequently, DOJ and HHS, along with many other Federal agencies, have issued final rules to implement the adjustments. Health care providers, who were fined after August 1, 2016, as well as health care violations that were reported after November 2, 2015, would be accountable for this new penalty amount.
Some reports point out that the chances for CMPs to increase are high with the release of annual inflation adjustments from the Federal agencies. In a recent announcement, DOJ stated that the penalties would approximately increase by double due to an interim final rule, stated under the Federal regulation.
The Railroad Retirement Board had already hinted about a significant increase in FCA penalties, and this increase was anticipated since May 2016. This agency had some occasional FCA cases, which involved fraudulent benefit claims. Moreover, the FCA already accounted and provided for penalties and trouble damages. The increase in penalties will be from a minimum of $5,500 to a minimum of $10,781, and from a maximum of $21,563 to a maximum of $21,563 due to the DOJ regulations.
The DOJ’s FCA penalties were previously adjusted under Debt Collection Improvement Act of 1996 back in the year. Because of this adjustments, the penalty range increased from $5,000 – $10,000, to $5,500 – $11,000 in the year 1996. Nevertheless, the recently released HHS interim final rule has implemented increased penalties for several health care violations and it includes the violations under the Office of Civil Rights, Centers for Medicare and Medicaid Services, Food and Drug Administration, and the Office of Inspector General.
HHS also indicated that the increased CMPs would affect managed care organizations, pharmaceutical manufacturers, and other health care providers, who are in business with Medicaid and Medicare programs.