In United States ex rel. Bunk v. Gosselin World Wide Moving, N.V., No. 12-1369 (4th Cir. Dec. 19, 2013), the Fourth Circuit reversed a district court’s judgment that awarded nothing on a prevailing $50 million False Claims Act claim for civil penalties.
The panel first ruled that FSA relator Kurt Bunk had “standing” because the harm to the federal government (from a scheme to fix prices and rig bids on charges for moving goods of U.S. military personnel) satisfied the injury-in-fact requirement for constitutional standing to sue.
The court also concluded that the award of zero in civil penalties was improper and ordered the trial court to impose $24 million in FCA penalties against the defendants following a trial at which the relator sought no FCA damages and no proof of economic harm to the United States was ever established. The panel observed that the FCA contains a statutory requirement of at least a $5,500 penalty for each of the 9,136 false invoices at issue — over $50 million! — and that the number seemed harsh in light of the $2 million or so in possible losses to the government. But fortunately the Relator had agreed to take far less — just $24 million. The court held, “Under the circumstances before us, we are satisfied that the entry of judgment on behalf of Bunk for $24 million on the DPM claim would not constitute an excessive fine under the Eighth Amendment. That amount, we think, appropriately reflects the gravity of [price-fixer/bid-rigger] Gosselin’s offenses and provides the necessary and appropriate deterrent effect going forward.” Id. at 44.
