Florida Court Concludes that Whistleblower Has Standing to Pursue FCA Civil Penalties Despite No Damages

In many FCA cases, the potential liability for civil penalties is vastly higher than potential damages, even after trebling. For that reason, defendants have often asserted various challenges, including Constitutional challenges, to the applicability or imposition of civil penalties.  Recently, in a February 6 opinion, U.S. ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, a district court in Florida rejected the argument that a relator who foregoes a claim for damages, and seeks only civil penalties under the FCA, lacks Article III standing. The court relied primarily on the Supreme Court’s 2000 opinion in Vermont Agency of Natural Resources, and concluded that the long tradition of qui tam actions – including those for recovery of civil penalties – dating back centuries, which was cited in Vermont Agency, supported the conclusion that qui tam suits seeking recovery of civil penalties only are properly understood to be “cases” or “controversies” within the meaning of Article III. The district court also cited in support the December 2013 opinion in U.S. ex rel. Bunk v. Gosselin World Wide Moving, N.V., in which the Fourth Circuit similarly held that relators have standing to pursue qui tam claims for civil penalties, even in the absence of any claim for damages.