Department of Justice Issues Inflationary Adjustment of Civil Money Penalties

“There are only three ways to meet the unpaid bills of a nation. The first is taxation. The second is repudiation. The third is inflation.” – Herbert Hoover

On May 9, 2022, the Department of Justice (“DOJ”) published a final rule making an inflationary adjustment to the civil money penalties (“CMPs”) assessed or enforced by the different components of the DOJ. The new rule is a mid-course correction, coming closely on the heals of an adjustment to the CMPs last made on December 13, 2021, less than six months before this most recent adjustment. this marks DOJ’s reaction to the increasing amount of inflation that the country is experiencing. So, as the inflation demon works its way down the belly of the beast, the Government is busy making more frequent adjustments than the annual process we had come to expect.The final rule is effective as of May 9, 2022 and affects penalties assessed after May 9, 2022.

DOJ is allowed to make periodic inflationary adjustments pursuant to the Bipartisan Budget Act of 2015 (“BBA”). These adjustments account for inflation in the previous period, rounded to the nearest dollar.

The final rule states that the applicable inflation factor is 1.06222 which means that the previous CMPs contained in 28 C.F.R. 85.5 should be adjusted by a factor of 1.06222 to determine the updated CMPs, rounded to the nearest dollar. The Final Rule provides examples on how to calculate the adjustment:

- In 2016, the Program Fraud Civil Remedies Act penalty was increased to $10,781 in accordance with the adjustment requirements of the BBA.

- For 2017, where the applicable inflation factor was 1.01636, the existing penalty of $10,781 was multiplied by 1.01636 and revised to $10,957 (rounded to the nearest dollar).

- For 2018, where the applicable inflation factor is 1.02041, the existing penalty of $10,957 was multiplied by 1.02041 and revised to $11,181 (rounded to the nearest dollar).

- Had an adjustment rule been published in 2019, where the applicable inflation factor was 1.02041, the existing penalty of $11,181 would have been multiplied by 1.02522 and revised to $11,463 (rounded to the nearest dollar).

87 FR 27514.

This inflationary adjustment affects the violations of the following laws contained in 28 C.F.R. 85.5: Brady Law - Nat'l Instant Criminal Check System, Child Safety Lock Act, Financial Institutions Reform, Recovery, and Enforcement Act, Foreign Assistance Act, False Claims Act, Program Fraud Civil Remedies Act, Federal Property and Administrative Services Act, Anti-Kickback Act, Driver's Privacy Protection Act of 1994, Ethics Reform Act of 1989, Office of Federal Procurement Policy Act, Disaster Relief Act of 1974, Freedom of Access to Clinic Entrances Act of 1994, Fair Housing Act of 1968, Americans With Disabilities Act, Servicemembers Civil Relief Act of 2003, Civil Asset Forfeiture Reform Act of 2000, Money Laundering Control Act of 1986, Anti-Drug Abuse Act of 1988, Controlled Substance Import Export Act, Controlled Substances Act, SUPPORT for Patients and Communities Act, Illicit Drug Anti-Proliferation Act of 2003, Immigration Reform and Control Act of 1986, National Motor Vehicle Title Identification System, and the  Confidentiality of information; State and Local Criminal History Record Information Systems. While this adjustment does not affect the CMPs enforced by different agencies like the Department of Labor, it suggests that those agencies may resort to mid-year corrections given the rising inflation.

For more information and or to review the Final Rule for yourself, please visit the Federal Register here: https://www.federalregister.gov/documents/2022/05/09/2022-09928/civil-monetary-penalties-inflation-adjustments-for-2022.