United States: Fourth Circuit Oral Argument Considers Questions Concerning Constitutionally Problematic FCA Fines

Last Updated: June 18 2013
Article by Kirsten Mayer, Thomas R. Sutcliffe and James P. Dowden

The Fourth Circuit recently heard oral argument in United States ex rel. Bunk v. Gosselin World Wide Moving (12-1369).1 During oral argument, the panel explored, among other issues, how to calculate fines under the FCA when the minimum fine called for by the statute violates the Eighth Amendment of the Constitution. While the panel in Bunk did not address the Eighth Amendment issues directly, it is poised to answer a series of questions that will have considerable practical significance for FCA defendants. Indeed, as much as $50 million rests on the court's decision, and the Fourth Circuit's ruling has the potential to be an important guidepost as courts around the country grapple with potential constitutional limits to FCA fines.

District Court's Decision in Bunk

In Bunk, relators brought a complaint alleging that several defendants violated the FCA by participating in bid rigging and price fixing in obtaining contracts for transporting household goods for U.S. military and civilian personnel stationed overseas. The allegations involved multiple different claims, some of which the government intervened with respect to, and one which the relators were left to pursue. With respect to the claim for which the relators were responsible, a jury found that certain defendants, including Gosselin Worldwide Moving, N.V. and Gosselin Group, N.V (collectively "Defendants"), knowingly submitted a false Certificate of Independent Bid Pricing to the government. The district court found that there was adequate evidence to support this finding and that each of the 9,136 invoices submitted to the government pursuant to the Defendants' contract with the government amounted to a violation of the FCA. Multiplying the number of false invoices by the minimum fine of $5,500 per violation under the FCA, the district court later determined that the minimum fine it could impose was approximately $50 million. The district court held that this fine was excessively high because there were a number of mitigating factors and no proven economic harm to the government. Although the government contended that it was only seeking sanctions for about half of the proven false claims, for a total fine of $24 million, the district court held that it had no authority to impose a fine below the FCA's statutory minimum, so it severed the penalty provision as applied, which resulted in no fine.2 The court entered judgment accordingly pursuant to Fed. R. Civ. P. 54(b). Both relators and the government appealed.3

Oral Argument before the Fourth Circuit

At oral argument, the discussion focused on (1) what number should be analyzed to evaluate the constitutionality of a fine under the FCA and (2) what is the right remedy if a court determines that a fine is, in fact, constitutionally excessive.

As to the first issue, the parties disagreed about what fine was required by the FCA in this case. Defendants argued that because $50 million was the statutory minimum fine for the number of false claims found at the district court level, no lower fine could be imposed under the statute. The government, intervening with respect to the remaining claim on appeal, argued that a lower fine could be imposed. Specifically, the relators, exercising a form of prosecutorial discretion on behalf of the government and as the "master of his complaint" in their individual capacity, could seek (and had sought) penalties for only some of the false claims, for a total fine of $24 million, thus eliminating the need for the court to weigh in on the constitutionality of the $50 million figure. The government argued that the proposed $24 million fine was less than nine times the loss to the government and was thus constitutional under United States v. Bajakajian, 524 U.S. 321, 334 (1998). In support, the government cited United States v. Mackby, 339 F.3d 1015 (9th Cir. 2003), in which the Ninth Circuit reviewed reduced penalties suggested by the government rather than the minimum authorized by statute. The panel repeatedly asked the government why the Court should be bound by a number arbitrarily chosen by the relators and whether the relators could exercise prosecutorial discretion on the government's behalf.

The parties also debated what remedy could be imposed if the court did find that the applicable fine (whether $50 million or $24 million) was constitutionally excessive. The government, citing Ayotte v. Planned Parenthood of Northern New Eng., 546 U.S. 320, 328-329 (2006), argued that the district court erred by severing the penalty provision of the FCA rather than reducing the fine, because a district court is obligated to fashion a remedy for a constitutional violation that will preserve as much of the statute as practicable. In a position not adopted by the government, the relators also argued that the criminal sentencing guidelines control the excessive fine analysis under the FCA and provide a constitutional ceiling for what fine may be imposed. Defendants contended that the criminal sentencing guidelines do not apply to a civil FCA suit and also argued that the district court reached the correct result when it severed the penalty provision and imposed a fine of zero dollars.4 When the panel questioned Defendants about their argument that since the fine was unconstitutionally high, no fine could be imposed – creating an incentive to submit additional false claims – Defendants argued that such concerns were baseless, because a high fine is constitutionally permissible if a defendant purposefully submits additional false claims to evade sanctions and lacks the substantial mitigation present here, where the government was not harmed and Defendants derived no financial benefit. 5

Over the last several years, courts have paid increased attention to the applicability of the Excessive Fines clause to fines under the FCA. In Bunk, the court has the opportunity to go one step further and address how constitutional questions interact with a key component of the structure of the FCA. The decision will have the potential to greatly affect the actual amount that FCA defendants who successfully raise constitutional objections will actually have to pay. If, as the government contends, courts have wide discretion to select constitutionally appropriate fines regardless of the FCA's statutory minimums, or if the government and relators have discretion simply to seek fines for only a certain number of proven claims in an effort to manipulate the minimum fine, then FCA defendants may still have to pay sizeable fines regardless of any constitutional victories they secure. But if, as the district court held, and as the Defendants in Bunk ambitiously argue, the panel rules that the FCA's minimum fine provisions effectively require either an unconstitutional (and therefore unimposable) fine or nothing, then FCA defendants could potentially avoid what could otherwise be enormous liability.

We will continue to monitor this case.


1 The appeal was consolidated with 12-1494, which arose from the same consolidated district court proceeding.

2 The court also issued a ruling in the alternative and construed the statute so as to avoid the constitutional issue by interpreting Defendants' conduct to consist of only one false claim (submission of the Certificate of Independent Bid Pricing) and imposed a fine of $11,000 (the statutory maximum for one violation). As a second alternative, the court considered what penalty it could impose if its decision was untethered from the statute. It determined that the "outer limits" of the permissible range is $1.5 million (ten times the financial gain to Defendants), but because the FCA's intent is to impose only an "appropriate" penalty, it would impose a sanction of $500,000.

3 On appeal, the government also challenges the district court's rulings concerning a separate claim with respect to which the government intervened in the district court. This issue did not receive much attention during oral argument and is not addressed here.

4 In the alternative, Defendants argued that the court should impose the $11,000 fine proposed as the district court's first alternative. Defendants also argued that the $24 million fine was unconstitutionally excessive.

5 On a topic subject to extensive briefing but receiving minimal attention at oral argument, Defendants argued on cross-appeal (12-1417) that the relators lacked Article III standing because they sought to vindicate only a sovereign interest of the United States, and not a proprietary interest so that the main precedent in this area, Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000), did not apply. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions