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Will the Supreme Court slash False Claims Act penalties?

by Hoyer Law Group, PLLC | Jul 9, 2014 | Whistleblowers

Gosselin Worldwide MovingOne case we’ll be watching next term is whether the Supreme Court takes the appeal of Gosselin World Wide Moving, N.V. v. U.S. ex rel Bunk.

The complicated fact pattern laid out in the Fourth Circuit’s opinion tells the tale of the defendant moving company colluding with its industry peers to artificially inflate the packing and loading component of bids submitted to the government. For its actions, the moving company was convicted of federal criminal offenses in the Eastern District of Virginia. See United States v. Gosselin World Wide Moving, N.V., 411 F.3d 502 (4th Cir. 2005).

The Fourth Circuit’s opinion ends with a final judgment of $24 million in False Claims Act (FCA) penalties even though the actual damages inflicted on the government were much less than that amount. This is because once liability is established, the FCA permits treble damages plus a civil penalty of $5,000 to $11,000 for each false claim submitted. In the Gosselin case, the penalties added up quickly because the Fourth Circuit ruled that the FCA allows for a separate penalty for each of the more than 9,000 false invoices the moving company submitted to the government.

The American Hospital Association, United States Chamber of Commerce, and the Pharmaceutical Research and Manufacturers of America joined forces to submit an amici curiae brief (amici curiae is a legal term meaning that the organizations are offering the court information although they are not parties in the case) to encourage the Supreme Court to hear the case in order to limit the moving company’s exposure under the FCA.

The organizations that joined in the amici curiae brief are made up of businesses that would greatly benefit from decreased FCA exposure so their interest in the case is readily apparent. Conversely, the case is equally important to whistleblowers who could see their case’s value severely diminished by an adverse Supreme Court decision.

We at James Hoyer hope that the Supreme Court agrees with the Fourth Circuit that the dollar amount “appropriately reflects the gravity of Gosselin’s offenses and provides the necessary and appropriate deterrent effect going forward.” We’ll let you know what happens.

If you have any questions about this case or any other whistleblower matter, please contact us.

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