PENALTIES UNDER THE FEDERAL FALSE CLAIMS ACT AND VIRGINIA FRAUD AGAINST TAXPAYERS ACT
It is well known that the Virginia Fraud Against Taxpayers Act–like its counterpart the Federal False Claims Act–provides for treble damages against anyone submitting false claims to a government entity for payment.
But the VFATA and the Federal False Claims Act also create civil penalties for each violation of the law–that is, for each false claim submitted for payment. These civil penalties are, for all practical purposes, a liquidated damages provision that encourages individuals to blow the whistle, and encourages lawyers to learn about and prosecute these claims, even in cases where the dollar amount of each individual false claim might be very small.
Moreover, civil penalties under the VFATA and the FCA are mandatory. A trial court may exercise its discretion as to whether the higher or lower amount of penalties is awarded, but the Court does not have discretion to reduce the number of penalties. See, United States v. Cato Bros. Inc., 273 F.2d 153 (4th Cir. 1959).
Civil penalties have been a feature of the Federal False Claims Act since it was first passed during the American Civil War in 1863. The civil penalties called for in the first Federal False Claims Act were $2,000 per claim. Currently, the Virginia Fraud Against Taxpayers Act provides for civil penalties of between $5,000 and $10,000 for each false claim submitted to the Commonwealth. The Federal False Claims Act provides for penalties of between $5,500 and $11,000 for each false claim.
If anyone feels that the imposition of such a penalty is too harsh, consider this as proof of Congress’ intent to add teeth to the FCA — after adjusting for inflation, in today’s dollars the original False Claims Act called for penalties of $41,000 for each false claim.