Cost of Living Adjustment of Civil False Claims and False Statement Penalties
May 31, 2016
Overview
The financial penalties for violating federal contracting obligations are going up beginning July 1, 2016. Thereafter, there will be annual COLA increases for such penalties. Adjusted penalty levels may increase to as much as 250 percent of the level(s) in effect in 2015, and each agency is authorized to increase the penalty itself by as much as 150 percent. Accordingly, contractors may face a significant range of penalties depending on the penalty increases assessed by the individual agencies that they contract with. The bottom line is that the risks related to potential false claims and false statements are increasing for federal contractors. The details are provided below.
The New Civil Penalties
The Federal Civil Penalties Inflation Adjustment Act of 1990, as further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“FCPIAA”), provides for adjustments for inflation to the civil monetary penalties that Executive Agencies can assess for violations of applicable statutes and regulations, including those relating to False Statements and False Claims. The amendment also provides for FCPIAA escalation of Occupational Health and Safety Act violations.
The Office of Management and Budget’s (“OMB’s”) implementing memorandum states that “[i]n accordance with the 2015 Act, however, agencies shall not increase penalty levels by more than 150 percent of the corresponding levels in effect on November 2, 2015. Note: The 150 percent limitation is on the amount of the increase; therefore, the adjusted penalty level(s) will be up to 250 percent of the level(s) in effect on November 2, 2015.” Agencies have until July 1, 2016 to issue their specific interim final rules to adjust civil monetary penalties.
Following up on the FCPIAA and OMB guidance, on May 26, 2016, the Department of Defense (“DOD”) issued its interim final rule to adjust the civil monetary penalties that it may access for violations of designated provisions, including notably violations involving False Claims and False Statements. Under the interim final rule, the maximum per-claim penalty for such violations will increase to $10,781 from $5,500. 81 Fed. Reg. 33391. The stated purpose of the adjustment is to “improve the deterrent effect of civil monetary penalties and to promote compliance with the law.” Id. As noted by the interim final rule, the DOD is authorized to issue a “cost-of-living adjustment” to escalate this amount each year.
Significantly, the interim final rule provides that the escalated penalty “must apply only to civil monetary penalties, including those whose associated violation predated such increase, which are assessed after the date the increase takes effect (i.e., July 1, 2016).” [Emphasis added.]
Take-Away:
- As noted above, these new penalties can be assessed against violations predating the escalation.
- Make sure that you have a working compliance program and training to ensure your personnel understand the importance of compliance with applicable laws and regulations.
- Federal Acquisition Regulation (“FAR”) Mandatory Disclosure rules require reporting of credible evidence of actual or suspect violations. Early identification will help you to timely report and address such matters. If you become aware of a possible violation of covered laws or regulations, take appropriate steps to promptly investigate.
If you have any questions with regard to these matters, please contact Susan Warshaw Ebner, or the FortneyScott attorney with whom you work.
November 20, 2025 at noon EDT CLICK HERE to Register Join FortneyScott attorneys for a timely webinar addressing the Trump Administration’s escalating enforcement efforts targeting “illegal DEI” practices among federal contractors, grant recipients, and higher education institutions. In recent months, the Administration has initiated certification demands, expanded DOJ investigations under the False Claims Act, and increased EEOC scrutiny under Title VII. This session will provide critical insights into: The latest developments in federal investigations and enforcement; DEI programs under legal challenge; and Practical steps employers—especially federal contractors and grant recipients—should take now to mitigate legal risk and ensure compliance with EEO laws. This is the third installment in FortneyScott’s four-part Workplace Legal Compliance Webinar Series, designed for in-house counsel, compliance professionals, HR leaders, and business executives. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
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Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc . This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
Federal policies under the Trump Administration are reshaping workplaces nationwide. Employers must stay ahead of evolving laws and shifting EEOC priorities. Join FortneyScott attorneys on Thursday, September 18 th at noon EDT to learn the key steps organizations should take now to ensure compliance with EEO laws influenced by these broader policy changes. Key Topics to be Covered Include: Status of the Commission and what to expect once there is a restored quorum; Current EEOC priorities , including protecting religious liberties, eliminating unlawful DEI, and reshaping sex discrimination; Notable EEOC enforcement actions, updates, and emerging trends; and Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a four-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
November 20, 2025 at noon EDT CLICK HERE to Register Join FortneyScott attorneys for a timely webinar addressing the Trump Administration’s escalating enforcement efforts targeting “illegal DEI” practices among federal contractors, grant recipients, and higher education institutions. In recent months, the Administration has initiated certification demands, expanded DOJ investigations under the False Claims Act, and increased EEOC scrutiny under Title VII. This session will provide critical insights into: The latest developments in federal investigations and enforcement; DEI programs under legal challenge; and Practical steps employers—especially federal contractors and grant recipients—should take now to mitigate legal risk and ensure compliance with EEO laws. This is the third installment in FortneyScott’s four-part Workplace Legal Compliance Webinar Series, designed for in-house counsel, compliance professionals, HR leaders, and business executives. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
Understanding that everyone is going into Q4, which is the kickoff of your merit and compensation cycles, we want to support those compliance efforts. Join FortneyScott attorneys and our guest speaker, Rick Holt from Resolution Economics, on Thursday, October 23, 2025, at noon EDT for a discussion on strategies for reviewing compensation decisions under the governing legal standards and the Trump Administration’s enforcement priorities. We will focus on discussing: Changes in legal enforcements; Legal considerations for conducting pay analyses; Recommendations on refreshing analysis models; and, Remediation strategies.
On Tuesday, December 2, at 2pm EST , join attorneys from Novus Law Firm and FortneyScott and an I/O Psychologist from DCI as we discuss the scope of data being requested by the federal government and how to ensure that your institution is prepared. To register for this webinar, please CLICK HERE . Higher Education continues to be targeted by the Administration’s enforcement efforts to ensure compliance with federal anti-discrimination laws. Employment and admissions practices are subject to increased scrutiny by multiple federal agencies. For instance, both the Department of Justice (DOJ) and Health & Human Services (HHS) have issued Civil Investigation Demand (CID) letters requiring the submission of voluminous data and documents. These investigations pose significant risks, including potential civil and criminal lability, and the loss of federal contracts and grants. Additionally, the Department of Education (ED) has proposed major changes to the Integrated Postsecondary Education Data System (IPEDS) which, if implemented, would require institutions to report up to six years of detailed admissions data including applicant demographics and admissions criteria for undergraduate and graduate programs. Given this rapidly changing legal compliance landscape, higher education institutions should be prepared for government investigations that scrutinize wide-ranging practices, including those related to employment, admissions, and compensation. We will cover: Responding to federal agency investigations, which can include CIDs & scope of data production How to prepare for a potential investigation How the proposed IPED revisions may impact reporting burdens How federal agencies may use and share institute data Prospective data analytics that should be conducted
Understanding that everyone is going into Q4, which is the kickoff of your merit and compensation cycles, we want to support those compliance efforts. Join FortneyScott attorneys and our guest speaker, Rick Holt from Resolution Economics, on Thursday, October 23, 2025, at noon EDT for a discussion on strategies for reviewing compensation decisions under the governing legal standards and the Trump Administration’s enforcement priorities. We will focus on discussing: Changes in legal enforcements; Legal considerations for conducting pay analyses; Recommendations on refreshing analysis models; and, Remediation strategies. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
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We are pleased to announce that FortneyScott attorney David Fortney has been recognized as one of The Best Lawyers in America for 2026, in recognition of outstanding achievement and contributions to the field of Labor and Employment law. This marks a continuation of his recognition in The Best Lawyers in America since 2008, reflecting a sustained commitment to excellence, innovation, and leadership. It underscores the impact of his work within the professional community. We extend our congratulations on this well-deserved recognition.
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