First published in Law360, February 2012
By Craig D. Margolis, Tirzah S. Lollar, and Randall Warden
In a landmark decision on February 14, the United States District Court for the Eastern District of Virginia declined to impose per-claim statutory penalties of more than $50 million in a False Claims Act case with more than 9,000 “false” claims, but no damages. The court held that imposing such a disproportionate penalty would violate the Eighth Amendment’s excessive fines clause, and that it lacked discretion unilaterally to reduce the penalty under the statute.
As a result, after years of pretrial procedural wrangling and following a jury verdict, the relators (and the United States) recovered neither damages nor penalties. See United States ex rel. Bunk v. Birkart Globistics GmbH & Co., et al., No. 1:02-cv-1168 (E.D. Va. Feb. 14, 2012). This case demonstrates the pitfalls for relators and for the government itself in actively pursuing FCA claims in the absence of provable damages. Read the entire article here.