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AHA, others urge Supreme Court to bar excessive FCA penalties

June 24, 2014

The AHA, Pharmaceutical Research and Manufacturers of America, and U.S. Chamber of Commerce yesterday urged the U.S. Supreme Court to bar civil monetary penalties under the False Claims Act “that irrationally exceed the harm actually suffered by the government.” In a friend-of-the-court brief in a case seeking clarification of the FCA’s mandatory penalty provision, the groups said, “Irrationally large penalties under the False Claims Act are of great concern to American businesses that contract with the government or participate in government programs such as Medicare and Medicaid. Often companies face enormous penalties not because of the severity of the fraud or the magnitude of the harm to the government, but merely because of the way that invoicing is typically performed under their contracts – a procedure over which they have no control. The risk of incurring gigantic penalties leads many defendants to settle claims rather than bring them to trial, even when such claims are weak or meritless, thus stunting further development of the law in this area.”