In a current landmark choice, america District Court docket for the District of Minnesota dramatically lowered the damages and penalties awarded in a serious False Claims Act (“FCA”) case. United States of America ex rel. Kipp Fesenmaier v. The Cameron-Ehlen Group, Inc., et al., Case No. 13-cv-3003 (D. Minn., Feb. 8 2024) (Dkt. 1086). The case initially concluded with a staggering judgment of over $487 million towards the defendants. Nevertheless, after post-trial motions, the courtroom lowered the judgment over 55% to roughly $216 million, citing the Extreme Fines Clause of the federal structure as a limiting issue.
At trial, the jury discovered {that a} distributor of eye surgical procedure merchandise and its proprietor violated the Anti-Kickback Statute (AKS) by offering remuneration to ophthalmologists which led to the submission of 64,575 false claims to Medicare, leading to $43,694,641.71 in single damages. These damages have been then trebled below the FCA, and statutory penalties have been assessed for every false declare leading to an order to pay $487,048,705.13.
In post-trial briefing, the defendants sought judgment as a matter of legislation, a brand new trial, and a discount within the financial judgment on the grounds that the award violated the Extreme Fines Clause. The Court docket denied the request for a brand new trial and for judgment as a matter of legislation, apart from one transaction associated to a visit to New York Metropolis. Nevertheless, the Court docket granted a discount within the judgment on constitutional grounds, amending the award to $216,675,248.55.
In its evaluation, the Court docket thought-about the reprehensibility of the defendants’ conduct, the connection between the penalty and the hurt to the sufferer, sanctions in different circumstances for comparable misconduct, legislative intent, and the defendants’ means to pay. The Court docket discovered that whereas the defendants’ conduct was severe, sure points, such because the profit derived by the defendants and the character of some remunerative transactions (e.g., a salad and soda at a Christmas social gathering), have been much less extreme than typical AKS circumstances. Moreover, the Court docket famous that the penalties have been partly as a result of construction of Medicare’s billing course of, which requires separate claims for various charges.
The Court docket additionally noticed that the ratio of punitive damages to compensatory damages was extreme. Evaluating sanctions in related circumstances, the Court docket concluded that the Extreme Fines Clause permits a most restoration of $216,675,248.55, which incorporates precise damages, trebled damages, and penalties.
This case serves as a important reminder of the potential for constitutional challenges to play a decisive position within the consequence of FCA litigation. The roughly $271 million discount in damages underscores the significance of strategic litigation and a deep understanding of the constitutional protections obtainable to defendants. This case highlights the necessity for defendants and their counsel to scrutinize the punitive points of FCA judgments and to contemplate post-judgment aid motions as a viable avenue for mitigating monetary legal responsibility.
For additional dialogue on the implications of this landmark choice and strategic approaches in FCA litigation, please attain out to our skilled authorized crew.
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