Archives : 2013 : April
Gross Trebling vs. Net Trebling
What is Gross Trebling?
Gross Trebling is the Department of Justice’s preferred methodology for calculating treble damages under the False Claims Act. It involves first trebling ( tripling) the false claim amount and then deducting the value of the goods and services provided(aka “value of benefit conferred”). This methodology severely reduces the value of any value received by the government, reducing the impact of the defense of “benefit conferred”.
What is Net Trebling?
Net Trebling provides a more fair picture of the government’s actual damages by taking into account the actual damages sustained by the government due to the FCA violation by accounting for the value of benefit conferring prior to trebling.
What happened on March 21, 2013?
The Seventh Circuit rejected the Department of Justice’s preferred methodology of gross trebling, emphasizing that FCA damages should be calculated according to the net trebling methodology. See United States v. Anchor Mortgage Corp., No. 10-3122, 2013 WL 1150213 (7th Cir. 2013). The Seventh Circuit held that the Department of Justice’s choice of gross trebling is not sustained by policy or statutory language, and is relying on a misinterpretation of United States vs. Bornstein, 423 U.S. 303 (1976).
The Seventh district refused to follow the Ninth Circuit decision in United States v. Eghbal, 548 F.3d 1281 ( 9th Cir. 2008), citing the Ninth Circuits failure to address note 13 in Bornstein. Instead, the Seventh Circuit found support in numerous post- Bornstein appellate decisions, including the Second Circuit’s recent decision in United States ex rel. Feldman v. Van Gorp, 697 F.3d 78 (2d Cir. 2012), generally using a net trebling approach.
Intermountain Health Care Inc. is a non-profit health care organization and the principal health care provider in the state of Utah. On April 3, 2013, the Department of Justice announced that Intermountain agreed to pay the United States Government $25.5 million to settle allegations under both the False Claims Act and the Stark Statute. These violations were self-disclosed by Intermountain and involved fostering improper pecuniary relationships with referring physicians.
Fluor Hanford LLC is a contractor for the Department of Energy and performs management and engineering services at the DOE’s Hanford Nuclear Site in eastern Washington. Between 2005 and 2009, Fluor was contracted by the DOE to manage and operate the Hazardous Materials Management and Emergency Response (HAMMER) center. As of April 3, 2013, Fluor Hanford agreed to pay $1.1 million to settle allegations it had violated the False Claims Act by using federal funds for lobbying. The Department of Justice alleges that Fluor used federal funding to lobby Congress and other federal officials to increase funding for the HAMMER Center, violating both the false claims act and the Byrd Amendment, which prohibits the use of federal funds for lobbying. The allegations against Fluor were initiated by a whistleblower law suit filed under the False Claims Act by a former employee of Fluor, Loydene Rambo.
**Source: Department of Justice **