In U.S. ex rel. Behnke v. CVS Caremark Corp. et al., No. 14-cv-824 (E.D. Pa. Aug. 19, 2025), the court upheld a final judgment of $289,873,500, finding that the award did not exceed the amount permitted by the U.S. Constitution and rejecting defendants’ argument that the award violated Due Process and the Eight Amendment’s Excessive Fines Clause. The holding is consistent with earlier precedent but diverges from two other recent district court decisions from Minnesota and Texas that had held the awards in those cases did violate the Excessive Fines Clause.
In the Caremark matter, the court determined that the government had sustained $95 million in actual damages as a result of the defendant’s conduct following an eight-day bench trial. Pursuant to the FCA’s treble damages provision, the court awarded an additional $190 million, bringing the total award to $285 million. Finding that the defendant’s “misconduct was serious” but that the relator had not established the defendant acted with “actual knowledge,” the court also decided to award $9,500 per false claim, in the middle of the operative statutory range of $5,500 to $11,000. With 513 claims at issue, the court awarded $4,873,500 in penalties, bringing the total judgment to $289,873,500.
Applying principles from the Supreme Court’s seminal decision in State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408 (2003), the court considered three factors when assessing whether the award comported with the Constitution’s Due Process Clause: (1) the reprehensibility of the defendant’s conduct; (2) the disparity between actual harm and the damages award; and (3) how the award compared to penalties in similar cases. The court highlighted that the roughly 2:1 ratio of trebled damages and civil penalties to actual damages was well below ratios upheld by district courts both within the circuit and elsewhere (4:1, 10:1, and 3.6:1) and stressed that the fraud was “significant,” justifying the penalties imposed. Accordingly, the court concluded that the judgment comported with the Due Process Clause.
As to the Excessive Fines Clause, the court assessed the “(a) the essence of the defendant’s crime and its relationship to other criminal activity; (b) whether the defendant was within the class of people for whom the statute of conviction was principally designed; (c) the maximum sentence, including the fine that could have been imposed; and (d) the nature of the harm resulting from the defendant’s conduct.” Evaluating these factors holistically, the court determined that the judgment did not run afoul of the Excessive Fines Clause. The decisions, available at USCOURTS-paed-2_14-cv-00824-13.pdf, highlights continuing efforts of courts to avoid disproportionate awards that grossly dwarf actual damages while still allowing significant damages and penalties with the aim of deterring and punishing fraud.
This is an area of FCA jurisprudence that warrants attention. The Minnesota case, U.S. ex rel. Fesenmaier v. Cameron-Ehlen Group, Inc., Eyeglasses, No. 13-cv-3003, 2024 WL 489708, at *20 (D. Minn. Feb. 8, 2024) — in which the district court applied the Excessive Fines Clause to limit recovery to “no more than $216,675,248.55” consisting of “$43,335,049.71 of actual damages, $86,670,099.42 in trebled damages, and $86,670,099.42 in penalties — is currently on appeal. The appellate court may provide some welcome guidance.