In an opinion Monday, Judge McMahon imposed over $900 million in damages and statutory penalties under the False Claims Act on long-term care pharmacy services provider Omnicare after a jury verdict finding that Omnicare submitted claims to the government for medications that lacked valid prescriptions.

The actual damages to the government were approximately $136 million, but that amount was then statutorily trebled and coupled with statutory penalties. Omnicare argued that the Constitution limited the government to a one-to-one ratio of actual damages to penalties. It relied on State Farm Mut. Automobile Co. v. Campbell, 538 U.S. 408 (2003), which found a jury award of $145 million in punitive damages on top of $1 million in actual damages violated due process and which suggested that in some cases a one-to-one ratio might be the maximum allowable.

But Judge McMahon disagreed, finding that the case was governed by the Constitution’s “excessive fines” clause, not the due process clause implicated in State Farm:

The due process concerns that animated State Farm—concerns arising from a purely discretionary jury award of punitive damages—are largely absent here. “This discretion [in determining the amount of punitive damages], the arbitrariness that might accompany it, and principles of fair notice are what led the Court [in State Farm] to invalidate the award under the Due Process Clause.”  . . . . No such discretion or problem with notice is applicable in this case.

Congress set a significant penalty to be imposed on top of treble damages in an egregious FCA case, and Defendants—highly sophisticated parties—understood the severity of the statutory penalty scheme.

Furthermore, penalties that fall “squarely within the boundaries set by Congress” deserve a “strong presumption of constitutionality,” because the statutory range “reflects the considered legislative judgment as to what is excessive.”

Judge McMahon added that, under the applicable excessive fines analysis, penalties imposed by Congress are only excessive if they “shock the conscience.” The amounts at issue, the Court found, were “in the realm of the serious, but not the surreal,” and so did not shock the conscience.