The Eleventh Circuit recently held that the Eighth Amendment's prohibition on excessive fines applies to monetary awards in non-intervened FCA actions—the first federal court of appeals directly to address the application of this constitutional protection in non-intervened cases. See Yates v. Pinellas, No. 20-10276 (11th Cir.). However, the panel concluded that while the amount of the fine in this case was "very harsh," it was not unconstitutionally excessive.
In Yates v. Pinellas, following the government's declination, the district court imposed a total monetary award of $1,179,266.62 under the FCA based on the defendant's submission of laboratory test claims to Medicare without a proper CLIA certificate. Specifically, the jury found that the defendant violated the FCA on 214 occasions and that the United States had incurred $755.54 in damages. The court then imposed treble damages of $2,266.62 and statutory minimum penalties of $5,500 for each of the 214 violations, or $1,177,000, for a grand total of $1,179,266.62. The defendant moved for remittitur, arguing that this amount constituted an excessive fine in violation of the Eighth Amendment. The district court rejected the argument.
On appeal, the Eleventh Circuit had to decide the threshold question of whether the Eighth Amendment's Excessive Fines Clause applies to FCA monetary awards in non-intervened cases, such as this one. The panel answered in the affirmative. First, the court joined the Fourth, Eighth, and Ninth Circuits in holding that an FCA monetary award is a fine under the Excessive Fines Clause because it is at least partially punitive; treble damages and statutory penalties must be imposed regardless of the financial harm suffered by the United States. Second, the court broke new ground and held that "the monetary award in a non-intervened qui tam action is imposed by the United States." The court reasoned that the United States, namely, Congress, mandated FCA monetary awards and that the United States generally receives between 70 and 75 percent of the recovery in a non-intervened FCA action. Furthermore, a relator files an FCA suit on behalf of the United States and the United States remains an interested party in a non-intervened case, as shown by the various rights that the United States retains in a non-intervened case, such as consent before a relator may dismiss the qui tam action.
After recognizing the application of the Excessive Fines Clause to non-intervened FCA cases, the Eleventh Circuit affirmed the district court's decision that the monetary award in the instant case was not unconstitutional. The panel acknowledged that "[s]eeing a judgment of $1.179 million based on $755.54 in actual damages may raise an eyebrow," but was ultimately comfortable with the disparity because of the defendant's "repeated (214) instances of fraud against the United States" and the fact that the district court imposed a per violation penalty of only $5,500, which is the statutory minimum and less than half of the lowest amount authorized after inflationary adjustments. But the panel viewed the harm caused by the defendant as "considerable," because "[f]raud harms the United States in ways untethered to the value of any ultimate payment," such as by undermining public confidence.
Two of the panel's judges authored a concurring opinion, in which they questioned why courts measure the excessiveness of a fine against Congress's judgment in setting statutory penalties and likened this deference to "letting the driver set the speed limit." Additionally, in surveying the history of the Eighth Amendment, the concurrence explained that, at the time the founding generation ratified a prohibition against "excessive fines," the term excessive was understood to measure both the relationship between the fine and the offense and the relationship between the fine and the offender. The concurrence concludes, "[i]t's not obvious to me that Supreme Court precedent compels, or the Constitution allows, courts to ignore the impact of a fine on an offender's livelihood" and suggests that "returning to the Clause's original meaning would provide a more objective basis for our own judgments—and thereby alleviate any need for undue deference to Congress's."
Judge Tjoflat, concurring in part and dissenting in part, agreed with the two concurring judges that the Eighth Amendment analysis should, but does not currently, adequately account for the excessiveness of a fine as measured between the fine and the offender. However, Judge Tjoflat suggests that district courts should apply the 18 U.S.C. § 3553(a) sentencing factors to the FCA context as "the test for excessiveness of civil fines under the Eighth Amendment."
While the Eleventh Circuit's recognition that the Eighth Amendment's prohibition on Excessive Fines applies to non-intervened cases is a favorable development for defendants, the stark disparity blessed by this case raises troubling questions over the magnitude of a disparity that would be deemed sufficient to violate the Eighth Amendment in the context of the FCA. A copy of the panel's opinion can be accessed here.
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