United States v. Halper

PETITIONER:United States
RESPONDENT:Halper
LOCATION:State University of New York Albany

DOCKET NO.: 87-1383
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT:

CITATION: 490 US 435 (1989)
ARGUED: Jan 17, 1989
DECIDED: May 15, 1989

ADVOCATES:
John G. Roberts, Jr. – for appellee
Michael R. Dreeben – Argued the cause for the United States

Facts of the case

Irwin Halper, the manager of a company that provided medical services to patients eligible for Medicare benefits, was charged and convicted in criminal court of submitting 65 separate false Medicare claims. He was sentenced to two years in prison and fined $5,000.

The United States then brought additional civil charges under the False Claims Act, which authorized it to collect $2000 for each offense in addition to attorney’s fees and twice the damages sustained. In this case the actual damages were just $585, but because of the number of offenses the total penalty was more than $130,000. The District Court, however, ruled that the penalty was “entirely unrelated” to the government’s actual damages and would therefore be a second punishment for the same offense, violating the Double Jeopardy Clause of the Fifth Amendment. The penalty was therefore limited to double the amount of actual damages and attorney’s fees. The government appealed the decision directly to the U.S. Supreme Court.

Question

Where the penalty authorized under the False Claims Act is “entirely unrelated” to the damages actually suffered by the government, does imposition of the penalty amount to a “punishment” governed by the Double Jeopardy Clause of the 5th Amendment?

William H. Rehnquist:

We’ll hear argument first this morning in No. 87-1383, United States v. Irwin Halper.

Mr. Dreeben, you may proceed whenever you’re ready.

Michael R. Dreeben:

Thank you, Mr. Chief Justice, and may it please the Court:

This case concerns the application of the Double Jeopardy Clause of the Fifth Amendment to the civil False Claims Act, Title 31 U.S.C. 3729.

The district court invoked the Double Jeopardy Clause to bar a recovery by the government of penalties under the False Claims Act from Appellee who had previously been criminally convicted of making the same false claims.

And fined?

Michael R. Dreeben:

Yes, Your Honor, he had been fined.

Appellee knowingly made 65 separate false claims under the Medicare program, each of which overcharged the government by $9.

The False Claims Act provides a $2,000 mandatory penalty at the time that this action was brought for each such false claim.

The government accordingly sought a penalty of $130,000 in this case.

The district court focused on the fact that Appellee’s overpayment by the government was $585 from his 65 false claims.

It compared the penalty to the loss and determined that in the factual setting of this case, the sanction amounted to a criminal penalty that could not be imposed in view of Appellee’s previous criminal conviction and punishment.

It therefore held the False Claims Act unconstitutional as applied to Appellee in this case.

We believe that the district court’s analysis and conclusions are incorrect.

The False Claims Act has been on the books for 125 years.

It has been upheld before by this Court against a double jeopardy challenge very similar to the one accepted by the court below.

A statute very similar to the False Claims Act was upheld after that case in a similar double jeopardy challenge.

In the False Claims Act, Congress has provided a reasonable lump sum recovery for every false claim made on the government.

It is designed to cover reasonably anticipated losses in the average case.

It is also designed to compensate the government for the costs of investigation and prosecution, which can be extremely heavy in ferreting out, detecting and bringing wrongdoers to justice.

Finally, it serves the purpose of deterring wrongdoers from committing false claims such as the kind that Appellee committed.

It is not a criminal statute.

William H. Rehnquist:

Isn’t there some sort of a volume discount, though?

I mean, if there are 65 claims investigated, it wouldn’t cost as much as to investigate just one.

Michael R. Dreeben:

It… it may be true that in some cases the costs of investigation do not rise as rapidly as the number of false claims, but Congress can anticipate that over the large majority of cases, when someone has cheated the government a large multiple of times, the costs of investigation do go up.

This case, although the facts surrounding the investigation are not in the record, does illustrate that there are very heavy costs involved in prosecuting Medicare fraud.

There was a substantial degree of investigation that was required, and Appellee’s criminal trial consumed four days.

Harry A. Blackmun:

I’m just curious, counsel.

Is this amount collectible against this man?

Michael R. Dreeben:

The government has taken discovery from Mr. Halper in the civil action and has determined that he has substantial assets that were transferred out of his name into his wife’s name and into his son’s name.

Michael R. Dreeben:

And it’s the opinion of the United States Attorney’s Office that’s responsible for this case that there is a good chance of collecting part or all of the judgment in this case should this Court reverse and allow the case to go forward.

Anthony M. Kennedy:

Well, the district court set the amount at $16,000.

Wasn’t… isn’t that a finding of fact that that’s the reasonable amount of the government’s cost?

Michael R. Dreeben:

No, Your Honor.

It is not a finding of fact.

This case was decided on summary judgment.

The government moved for collection of the full amount of the penalties to which it is entitled under the False Claims Act by virtue of the false claims.

It never submitted any evidence of its costs of investigation.

The district court essentially speculated about what it believed those costs of investigation would be, without any evidence whatsoever.

One of the objections that we have to this–

Anthony M. Kennedy:

It… it… it came to that conclusion by eight times $2,000?

Michael R. Dreeben:

–That’s correct, Your Honor.

It simply said–

Anthony M. Kennedy:

Was there any rationale given for the eight count… for the figure eight?

Michael R. Dreeben:

–Not… not to my knowledge.

There is no rationale whatsoever except for the fact that the district court simply believed that that amount would be adequate in this case to cover the government’s expenses.

Sandra Day O’Connor:

Well, Mr. Dreeben, do you think that the amount of the so-called civil penalty has to bear some relationship to the cost to the government?

Michael R. Dreeben:

I think that in the average case it does have to bear some cost, but this Court made quite clear in Rex Trailer Co. v. United States that the task for deciding what a reasonable recovery would be per fraud is one for Congress so long as it remains within a reasonable realm of… of magnitude.

And clearly, $2,000, as an estimate of what the government would have to devote in terms of resources to prosecute fraud, is reasonable.

Sandra Day O’Connor:

Well, I guess the statute has now been amended to a range of not less than $5,000 and not more than $10,000?

Michael R. Dreeben:

That’s correct, Your Honor.

It was amended in 1986, when Congress took a look at the False Claims Act, concluded that the $2,000 figure which had originally been set in 1863 had now been so eroded by inflation that it really was not fulfilling the purposes it was intended to fulfill.

And Congress accordingly did raise the figure that can be permitted for each false claim, and it allowed a certain amount of discretion to district courts to decide between $5,000 and $10,000 how much should be awarded.

But Congress did take a look at the false claims amount and realized that $2,000 in 1863 dollars would now be about $18,000.

Antonin Scalia:

Was there a lot of discussion in that amendment about how much it costs in fact to prosecute a claim or to investigate a claim?

Michael R. Dreeben:

No, Your Honor.

I–

Antonin Scalia:

Was there any discussion about how much it costs to investigate or to prosecute a claim?

Michael R. Dreeben:

–I don’t believe that either of the committee reports discussed that explicitly.

Antonin Scalia:

Is Congress unaware of the… the principle of economies of scale?

Michael R. Dreeben:

I think that Congress is well aware of it, but it’s also aware that there may be other measures of recovery that are appropriate–

Antonin Scalia:

Is there any reason to believe in the legislative history of the amendment or of the original statute that Congress at all adverted to how much it costs to investigate and prosecute?

Michael R. Dreeben:

–I think, Your Honor, to the extent that Congress displayed its awareness of this Court’s decision in United States ex rel. Marcus v. Hess and that the Congress is presumed to be aware of other decisions of this Court that have held that reasonable lump sum penalties do help compensate the government for the heavy costs of investigation.

Antonin Scalia:

Well, I’m sure Congress was aware that we… we might strike it down if it went too far, but what I’m trying to say is… is do we really take this as a congressional estimation of how much it costs to investigate and prosecute?

Was there any attempt whatever to estimate that?

Or rather, was it an attempt to pick a figure that we would leave alone?

Michael R. Dreeben:

Well, I think that both elements are there.

There was not a scientific study that I’m aware of of how much it costs the government on average to investigate fraud.

But Congress was made aware that it is expensive to investigate fraud, and it did provide a figure that it felt would ensure that the government is fully compensated.

It also provided the $2,000 figure originally and the $5,000 to $10,000 range that’s currently in existence to provide some deterrence so that there is an economic disincentive for continued false claims of this nature.

Byron R. White:

Was there… were there hearings on the amendment?

Michael R. Dreeben:

There were hearings on the amendment.

Byron R. White:

Did… was… who proposed the legislation?

Michael R. Dreeben:

The Justice Department, I believe, originally–

Byron R. White:

Well, in your transmittal letters, did you talk about costs?

Michael R. Dreeben:

–Now, I’m not aware… I haven’t reviewed the transmittal letters.

So, I’m not aware.

Byron R. White:

Well, did a Justice Department representative testify?

Michael R. Dreeben:

Yes, [inaudible] Justice–

Byron R. White:

Anything about costs?

Michael R. Dreeben:

–Specifically about the… the need for a particular dollar figure for costs, I’m not sure that it was.

But the legislative history does display a desire to ensure that the government is fully compensated, and there are repeated references to the fact that it’s very difficult to ferret out and detect fraud.

To the extent that… that Congress is aware of… of these problems, it’s entitled to pick a reasonable figure to address them.

Byron R. White:

While I’ve got you interrupted, if there hadn’t been a criminal proceeding here, I suppose… if there weren’t a criminal proceeding in this case, I suppose the theory of the district court would mean that the case would have to be tried as a crime… as a criminal case.

Michael R. Dreeben:

Yes, Your Honor, I think that it would.

But the district court essentially construed the sanction in this case to be so heavy as to amount to a criminal punishment, and the logic of its decision would require the case to be tried beyond a reasonable doubt.

Byron R. White:

So… so… so, some… you would have to… in a case like this, you would have to decide in advance what might… how much of a fine might be determined to be criminal?

Michael R. Dreeben:

The government is not aware of how we would live with a ruling like this because we would never know in advance whether a case would be civil or criminal under the district court’s test.

The district court did not even articulate why the ratio in this case was excessive and what ratios would satisfy it.

Anthony M. Kennedy:

Well, I suppose you could say that the government knows that it’s always a civil proceeding, but that if the fine is shown to be excessive, it’s just scaled down.

Michael R. Dreeben:

If the statute were written to permit that result, that would be a reasonable way to handle it, but the statute was not written that way.

The 1986 amendments make crystal clear that Congress anticipated mandatory, automatic forfeitures for each fraud that was committed on the government and it intended that the government be able to collect the penalty for each fraud that–

Well, but–

Michael R. Dreeben:

–existed.

Anthony M. Kennedy:

–The case would have to be tried.

If it were an excessive fine, it would supposedly have to have been tried under the criminal rules and proved beyond a reasonable doubt and things like that.

Michael R. Dreeben:

Yes, Your Honor, it would if in fact it were a criminal sanction.

We think where the district court went wrong is in analyzing the False Claims Act to impose a criminal sanction at all.

The… the theory of the action is to compensate the government for false claims and for economic damages that occur from such false claims, and it is not intended to stigmatize the defendant as a violator of criminal laws and, therefore, is not within the scope of… of the coverage of the Double Jeopardy Clause in the first place.

This–

Antonin Scalia:

So long as that’s the theory, it’s all right.

I mean, so all Congress has to say is at the beginning of a statute that imposes a $10,000 forfeiture or 100… or $1 million forfeiture, the theory of this statute is not criminal.

It is simply a civil penalty.

Michael R. Dreeben:

–That’s the first step in the analysis, Your Honor.

Antonin Scalia:

But not the last.

Don’t we have–

Michael R. Dreeben:

That’s correct.

Antonin Scalia:

–to look it to see if it bears any reasonable relationship to the… to the monetary cost to the government in the case?

Michael R. Dreeben:

Well, I… I think that… that the second step of the inquiry that this Court has suggested does require some oversight of whether the penalty is so excessive as to transform it into a criminal one.

But the question of… of what dollar figure is necessary to compensate the government in the broad run of cases is one that is… that’s clearly belongs to Congress.

And the deference that is owed to it is reflected in this Court’s frequent admonition that it would take the clearest proof to overcome Congress’ intent to create a civil sanction and to deem it transformed into a criminal one.

In fact, this Court has never found that a monetary penalty set by Congress in the fashion of the False Claims Act was so excessive as to be transformed into a criminal penalty.

The only settings in which this Court has overturned Congress’ intent to create a civil judgment is when Congress has prescribed something like imprisonment or loss of nationality, which are the kinds of sanctions that are really not consistent with civil law at all.

But a fixed monetary penalty is a historically civil kind of remedy.

It is related to an action in debt, and this Court [inaudible] traced the history of actions in debt in Tull against United States and expressly viewed them as being a civil type of recovery.

Antonin Scalia:

You’re saying we… we can never look into the… the monetary amount?

Is that your position?

Michael R. Dreeben:

No, no.

The Court has to look into it to some extent.

But it has to look into it with a very deferential approach to it.

Antonin Scalia:

To determine what?

To determine whether it is reasonable to think that Congress was trying to come up with an amount that overall would compensate the government?

Michael R. Dreeben:

To determine two things: first, whether the amount that Congress came up with does bear a reasonable relationship to its purpose of compensating the government.

You mean in the average case?

Michael R. Dreeben:

In the average case, that’s correct.

Not in every specific case because Congress is legislating for the broad categories.

And the second factor is whether it’s reasonably related to Congress’ deterrent purpose without so moving into the realm of over-deterrence as to be essentially a criminal sanction.

There would come a point, I’m… I’m quite sure, where a… a fine would be so heavy that this Court could not say that it truly is civil in character, but I don’t think that the False Claims Act comes close to that.

Fixed monetary sums of $1,000 were common in the early part of this century, and the Court had no difficulty in Hepner against United States and in United States v. Reagan in saying that those kinds of penalties were civil.

The False Claims Act was passed in 1863.

When Congress amended the False Claims Act in 1986, it did not even bring the $2,000 figure up to where inflation had eroded it.

It only increased it a small fraction of that amount.

Antonin Scalia:

My problem is that it… it is so obvious that it does not cost the government as much to prosecute 65 repetitive violations than it does to prosecute 65 separate violations.

That is such an obvious principle that any legislative body that had in mind providing for whatever you call the average case an amount that would not be taking from that defendant any more than would be necessary to compensate the government… any legislative body would take account of the fact of… of that economy of scale and… and would not say $2,000 per offense, but would say $2,000 per offense, with a maximum of blank dollars per prosecution or something like that.

Otherwise, I really… it doesn’t seem to me the government is even trying to make the… to make the… it isn’t the punishment fit the crime.

What would you call it?

The… the penalty fit the civil violation.

Michael R. Dreeben:

Well, Your Honor, it does serve both the purpose of deterring repeated small frauds and of compensating the government.

And we’ve never denied that it has both of those functions.

Without some sort of a fixed monetary penalty that attached to each successive small fraud, there would be very little incentive for contractors not to try to commit small frauds in the hope of evading detection.

The Medicare program, for example, gets literally millions of claims made on it each year.

The government is not capable nor are its fiscal intermediaries capable of reviewing all of those claims.

So, it prescribes a figure that both allows it to get compensated when it does catch somebody and also provides an economic disincentive for continuing it.

If… if there were not a fixed penalty, the government would be virtually incapable of prosecuting and collecting damages for this kind of case because the… the burden on the government of showing how much did it cost for this FBI agent to conduct this interview–

Byron R. White:

xxx.

Is there any… where did the district court find out, if it did, how much the government’s expense was in investigating?

It said even adding that amount to the government’s expense of investigating and prosecuting the statute, the total amount is excessive.

How did it know what it cost the government?

Michael R. Dreeben:

–Your Honor, I have no idea how the district court knows because it didn’t set out any reasoning and it had no evidence.

I think the best explanation of it is that it speculated.

Michael R. Dreeben:

It substituted its judgment for Congress’ judgment about what an appropriate penalty would be.

In other settings, Congress has provided formulas for recovery of damages and to ensure adequate deterrence of wrongdoing.

The best example of that is perhaps the treble damages remedy that’s allowed for Sherman Act violations.

It has never been held by this Court that Congress cannot allow an action for treble damages to follow an action for criminal violations under the Sherman Act.

Anthony M. Kennedy:

Well… well, but in this statute I take it’s your position that if the average that Congress somehow sets meets some rational standard, that the statute can never be criminally applied to any person no matter how excessive it is in his individual case.

Michael R. Dreeben:

Well, it is our position that this statute–

Anthony M. Kennedy:

Well, you said earlier that the statute could be unreasonable.

Did you mean in the amount that it sets on the face of the statute or as applied to the particular case?

Michael R. Dreeben:

–I think the analysis would have to be on the face of the statute.

If Congress had picked an amount that was so excessive–

Anthony M. Kennedy:

Again, so that it follows that a particular statutory penalty can never be criminally punitive as to some persons, but not as to others.

Michael R. Dreeben:

–That’s correct.

And as to this statute, that’s right because the only reason why a penalty would be large is if someone had committed a very large number of false claims on the government.

That is the explanation for the penalty in this case.

Appellee committed 65 knowing false claims of which he was criminally convicted.

And the penalty for that corresponds only to that large number of false claims.

The statute isn’t transformed into a criminal type of penalty simply because there are a large number of false claims involved.

William H. Rehnquist:

I suppose if this Court were to hold that the statute has to recognize some sort of volume discount or economy of scale, you couldn’t have a fixed penalty for 65 different counts.

It would have to be a kind of a declining scale of some sort.

Michael R. Dreeben:

That’s right, Your Honor.

And there are going to be cases where the costs of prosecution do rise proportional to the amount of false claims.

So, for Congress to be limited in a way that requires it to reduce the government’s compensation with the number of false claims may, in effect, deprive the government of full compensation in given cases.

So, the lump sum penalty does function, in the broad category of cases, to ensure that the government is recompensed for the costs of investigating these false claims and that it has a mechanism to ensure deterrence of the false claims.

We think that the consideration in the 1986 amendments of the penalty reflects a very recent congressional judgment that indeed the kinds of penalties involved in this case are civil and do not pose the double jeopardy problems that have been alluded to by the district court.

Congress specifically provided for a form of collateral estoppel between criminal convictions and the civil judgments which recognizes that it intended that one action follow the other.

It also recognized that in cases of Medicare fraud, there may be a very large number of false claims.

So, the congressional determination in this case was, indeed, that the statute be applied very much in the fashion that it was applied by the district court in this case.

If the district court’s theory were adopted, the government would have virtually no way to ensure that it would be fully compensated when, as in this case, there are a great number of false claims.

I’d like to reserve the rest of my time.

William H. Rehnquist:

Very well, Mr. Dreeben.

William H. Rehnquist:

Mr. Roberts, we’ll hear from you now.

John G. Roberts, Jr.:

Mr. Chief Justice, and may it please the Court:

After punishing Mr. Halper with two years in prison and a $5,000 fine for his $585 in false claims, the government brought a second proceeding against him seeking a $130,000 penalty for those same false claims.

The district court correctly concluded that this would be punishing Halper twice for the same offense, in violation of the Double Jeopardy Clause, and the judgment below should be affirmed.

Now, the government does not dispute that the second proceeding was based on precisely the same false claims for which Halper had been previously convicted and punished.

Indeed, the government relied exclusively on Halper’s prior criminal conviction to establish his liability in the second action.

What the government says is that the $130,000 penalty should not be regarded as a second punishment because it served a remedial purpose, that of compensating the government for its losses.

But the facts belie that contention.

A $130,000 recovery cannot be dismissed simply as compensation for $585 in damages.

Nor is the answer any different if the government’s costs of investigation and prosecution are factored into the equation.

The district court, which was intimately familiar with the details of Halper’s fraud, the record in the case and all the judicial proceedings concluded that $16,000 would fully compensate the government for all its costs.

William H. Rehnquist:

How did the district court reach that conclusion, Mr. Roberts?

John G. Roberts, Jr.:

Well, it did the best it could on what the government gave it.

Only the government knows how much it cost to investigate and prosecute.

And in the first opinion the district court arrived at the $16,000 figure and said–

William H. Rehnquist:

Well, did the district court hold a hearing and give the government an opportunity to present evidence?

John G. Roberts, Jr.:

–Well, I think in… in any particular case where the district–

William H. Rehnquist:

I mean, did the district court do that here?

John G. Roberts, Jr.:

–No, it didn’t.

In its first opinion, though, it challenged the government to come up with some evidence.

It said this is my approximation.

He did use that word.

But the government hasn’t given me any evidence of the expenses, so this is the best I can do.

Byron R. White:

Well, he… he just talked about investigation.

Is that it?

John G. Roberts, Jr.:

The costs of investigation and prosecution.

Byron R. White:

Of the whole criminal case?

John G. Roberts, Jr.:

Investigating the fraud.

It’s not clear to me whether he–

Byron R. White:

Well, I can’t imagine that it only cost the government $16,000 to prosecute the criminal case.

John G. Roberts, Jr.:

–Well, this was actually a fairly easy case.

This is not a complicated fraud.

If you recall the… the details, you… you got an extra $9 on your Medicare claim for the first patient you visited at a facility.

And Halper turned in invoices listing 12 people as the first person visited that day.

It was a very transparent fraud, very easy to investigate and very easy to prosecute.

Byron R. White:

Well, it started… I suppose it started in the… in another department?

I mean, somebody turned it over to Justice, didn’t they?

John G. Roberts, Jr.:

It started as a… as a criminal investigation.

I don’t know if there’s–

Byron R. White:

I know, but wasn’t it referred to Justice by somebody else?

John G. Roberts, Jr.:

–I’m not aware that it… it was.

It could have been from a… from a Medicare fraud unit or something.

Byron R. White:

I would suppose it would, wouldn’t you?

John G. Roberts, Jr.:

If it had been, I would suppose that would reduce even further the costs of investigation and prosecution.

Byron R. White:

I don’t know.

It might increase it.

John G. Roberts, Jr.:

Well, if they have a set unit there who looked… presumably which looks at the… the claims that are… are submitted as a… as a routine… that’s their… their job… it wouldn’t be very hard to pick Halper out.

Byron R. White:

And then it’s referred to the Justice Department and then it goes to the U.S. Attorney?

John G. Roberts, Jr.:

Yes.

And… and the civil side of the case, of course, was… was… was open and shut.

It was collateral estoppel from the criminal conviction.

There was no need to put on any–

Sandra Day O’Connor:

Mr. Roberts, do you take the position that the court in every case brought under this False Claims Act has to force the government to litigate the specific cost to the government of prosecuting and investigating that case to see if it bears a rational relation to the amount of the fine?

John G. Roberts, Jr.:

–Well, I think as an initial matter, the Court can assume–

Sandra Day O’Connor:

That… that just seems like… a… a… an unusually complex burden to place on the government.

John G. Roberts, Jr.:

–Well, I think it would really only come into play when you have a disproportion between penalty and actual damages as stark as it is in this case.

The government relies on the Hess case.

There the penalty recovery equaled the… the government’s loss.

Here it was 220 times the government’s loss.

In this sort of case, I think the district court does have to look and say if this is remedial, show me how this compensates you for loss and how it–

Sandra Day O’Connor:

Do you think the government can win its case just by producing average costs of investigation and prosecution of civil fraud?

John G. Roberts, Jr.:

–No, I don’t, Your Honor.

The government argues today that we shouldn’t concern ourselves with what the facts are in any particular case, but just, as they’ve said, if it works out well enough as a general matter.

I don’t think that’s how the Double Jeopardy Clause works.

The issue is the rights of this particular defendant in this particular case, and it doesn’t strike me as an adequate answer to say that the statutory formula works out well enough as a general matter in the average case.

And it shouldn’t come as a surprise that there might be this disproportion between recovery and… and actual loss because the formula for calculating that recovery bears absolutely no relation to the government’s loss.

It’s based on the number of counts in the complaint, not actual damages or costs of investigation.

William H. Rehnquist:

Well, supposing in this case, Mr. Roberts, the district court had found through whatever method he used that the costs were $16,000 and the statute required the imposition of a penalty of, say, $40,000.

Let’s say there were 20 counts instead of 65.

Is that good or bad under your theory?

Can that be maintained as a civil prosecution?

John G. Roberts, Jr.:

No, Your Honor, it cannot.

It… it can be maintained up to the $16,000 limit.

Anything beyond that is… is punishment and a second punishment when the defendant has already been–

William H. Rehnquist:

So, there’s no play at the joints.

It’s just strictly the cost of prosecution of this particular case.

John G. Roberts, Jr.:

–Well, plus the actual damages.

William H. Rehnquist:

Plus the actual damages.

John G. Roberts, Jr.:

There is play at the joints, and… and the district court recognized that in arriving at that $16,000 figure, it did have to take into account the difficulty of calculating the costs and… and… and the damages.

And he expressly did that.

But once–

Antonin Scalia:

What about… what about this Medicare fraud unit that is over there in… in HHS?

And… and they’re permanently in place just to look at these submissions by… by doctors.

And this is the only… the only guy they caught all year long.

Why… why wouldn’t the… the total annual salary of that whole unit properly be chargeable to… to this prosecution?

John G. Roberts, Jr.:

–Well, I don’t think the… the defendant in any particular case has to pay for the wasted efforts going after others.

Antonin Scalia:

Why not?

John G. Roberts, Jr.:

He should certainly be made to pay for the costs that he caused, in other words, the time spent investigating his case.

Antonin Scalia:

Well, he caused the whole year’s worth of work.

There was nobody else that they caught.

Antonin Scalia:

I mean, as far as that year’s of work go, he was it.

John G. Roberts, Jr.:

Well, I think there’s a point at which the rational in Hess, in other words, compensating the government for its losses… there has to be a point at which… certainly he doesn’t have to pay his share of the overhead on the… on the national debt.

These… the notion of the costs of investigation and prosecution is not a novel one.

In… in private litigation, indeed, in litigation involving the government, there are many cases where they are, for example, claiming attorney’s fees.

It’s fairly routine.

You submit an affidavit from the prosecutor detailing the costs involved.

I don’t think it need go much beyond that in this sort of case, including the costs of the… the investigation.

But even if you… you regard the $16,000 figure as a little soft I terms of–

Byron R. White:

Was there an indictment here?

John G. Roberts, Jr.:

–In the first case, yes.

Byron R. White:

In the criminal case?

John G. Roberts, Jr.:

In the criminal case, yes.

Byron R. White:

Do you know how long that took?

John G. Roberts, Jr.:

Before the grand jury?

No, Your Honor.

I do not.

Again, I… I’d just reiterate that this… this is not–

Byron R. White:

Only… only one government attorney before the grand jury, or do you know?

John G. Roberts, Jr.:

–The indictment was signed by one assistant United States attorney.

I suspect this is the sort of case that could be easily handled on the documents.

You have the claims saying here are the 12 people, each of whom was the first one I saw on this particular day.

It struck me as… as a fairly routine case in which the government’s estimate–

Byron R. White:

Did the government have to go before a judge during the grand jury proceeding to… for some rulings or not?

John G. Roberts, Jr.:

–I’m not sure.

I don’t believe so.

I think they can just go before the grand jury.

Thurgood Marshall:

They have five going at one time in the Southern District, don’t you?

John G. Roberts, Jr.:

Five grand juries?

Thurgood Marshall:

Yes, at the same time, don’t you?

John G. Roberts, Jr.:

I think that’s right, Your Honor.

John G. Roberts, Jr.:

Yes.

Thurgood Marshall:

Well, how can you keep track of all five?

John G. Roberts, Jr.:

Well, I think when they get to the point… in a case that shows the disproportion, as in this case, 220 times the actual damages–

Thurgood Marshall:

You’re not going to charge him for all five grand juries.

John G. Roberts, Jr.:

–No, and not all the time of the one, just… just the time spent in this particular case because the issue concerns the rights of this particular defendant in this case.

And I don’t think the principle that you can average out the Double Jeopardy Clause is one that this Court has accepted in the past.

Now, under the government’s theory, the penalty in this case is remedial and compensatory, regardless of what the facts show.

I’ve pointed out the facts in this case, which I think are stark enough.

But the government says it could have prosecuted Halper under the amended act, in which case his minimum penalty would have been $325,000 and it could have gone up to $650,000.

A defendant who filed 200 false claims of $1 each for total damages to the government of $200 would face a minimum mandatory penalty of $1 million.

And still the government would say that that’s remedial and compensatory.

And there’s no reason to stop there.

If this Court accepts the government’s theory, Congress can up the ante and raise the maximum penalty from $10,000 to $20,000 or $100,000 or $1 million.

There is nowhere to draw the line under the government’s theory.

William H. Rehnquist:

Supposing this were a criminal prosecution and exactly the same facts were shown, but the statute, after a criminal conviction, provided for a fine of $1 million.

Now, do… do you think the district court could impose a fine of $1 million in a case like this in a criminal prosecution?

John G. Roberts, Jr.:

The only issue would be whether it violated the Eighth Amendment, the excessive fines or cruel and unusual punishment provision.

But this was not a criminal prosecution.

And I think, Justice White, in response to one of your earlier questions, the district court’s holding isn’t necessarily that this penalty can only be imposed in a criminal prosecution.

What the district court did was recognize that when the defendant had been punished once–

Byron R. White:

Why did he say this was a criminal prosecution?

John G. Roberts, Jr.:

–Well, he did say this was a criminal penalty, but he–

Byron R. White:

Well, I… I can’t imagine why you’d come out differently if there hadn’t, been another criminal… if there hadn’t been a criminal prosecution–

John G. Roberts, Jr.:

–Well, it would be–

Byron R. White:

–preceding it.

It would still be a… a… the government seeking a disproportionate fine, and he would say this… you can’t… this is a criminal case.

John G. Roberts, Jr.:

–That may be, but he–

Byron R. White:

And I can’t imagine that he would… he would… he would say you’ll have… we want to try this like a criminal case.

John G. Roberts, Jr.:

–But in terms of the holding, I think it’s a different question whether this on its face is a criminal prosecution because, after all, the district court did allow the proceeding to continue to the extent of awarding the government it double damages and all the costs of the… of the prosecution.

Byron R. White:

Well, you… do you think we’d have to overrule Rex Trailer?

John G. Roberts, Jr.:

Not at all.

In Rex Trailer, this Court simply held that $10,000 was reasonable liquidated damages for the fraudulent purchase of five automobiles.

Byron R. White:

Well, yes, but it also… but the Court also said that there is no requirement, statutory or judicial, that specific damages be shown.

John G. Roberts, Jr.:

And the Court specifically noted that the government, while it had not shown the amount of its damages, it didn’t doubt that the government had been injured, and it was simply saying liquidated damages of $10,000 is close enough in this case.

The notion of permitting the recovery as liquidated damages is the same notion as in Hess.

It sets a ceiling.

Byron R. White:

So, should we… our inquiry here is… is that we look at the $132,000 and try to speculate what the government… whether the government spent that much in HEW and everything else?

It’s just out of bounds.

John G. Roberts, Jr.:

Well, it’s not… it’s not speculation.

The government to… when the disproportion is as high as it is here, 220 times, the government should be… has the burden of coming forward and saying this–

Byron R. White:

Two hundred and twenty times what?

John G. Roberts, Jr.:

–Times its actual damages, the $585 in false claims.

And the government has the burden of saying, yes, it did cost us this much and here’s why.

Otherwise, the justification is totally divorced from the facts.

They’re justifying this $130,000 penalty as remedial, as compensatory, and then they’re saying they don’t care if in any particular case it is so.

William H. Rehnquist:

At what point in the trial does the government come in and make this sort of a showing?

John G. Roberts, Jr.:

I think at the end of the proceeding after liability has been established and the statutory penalty is set, if there is a disproportion, in this case, the $130,000 versus $585, then the district court says this doesn’t look like compensation.

This looks like punishment.

Show me that it’s actually compensation.

And the district court did that in this case.

In its initial opinion it said my approximation is $16,000.

The government hasn’t come up with anything to show me I’m wrong.

Byron R. White:

You mean you… this… you… can the government… can the court transform a criminal proceeding into a civil one just by reducing the fine?

John G. Roberts, Jr.:

Absolutely.

It can just… just as… as in… in Morris v. Mathews the Court, confronted with the proceeding where the conviction violated the Double Jeopardy Clause, reduced the penalty to a non-barred offense and, therefore, said that was acceptable.

Byron R. White:

Well, yes, that’s a double jeopardy solution, but it still was a criminal prosecution.

John G. Roberts, Jr.:

It was a criminal prosecution.

Byron R. White:

And you’re saying we… we reduce it… we can… we can change a case that should have been tried as a criminal case into a civil case just by reducing the fine.

John G. Roberts, Jr.:

I don’t think he’s saying it should have been tried as a criminal case.

What he’s saying is that this is a civil case and it can be brought, but only so long as you don’t impose punishment a second time.

John G. Roberts, Jr.:

If you seek a recovery beyond the damages and costs, that’s punishment and since the defendant has already been punished, he can’t be punished a second time.

Now, the government has a fall-back position to this remedial and compensatory rationale, one that’s flatly inconsistent with it.

It says that the penalty can be upheld because it will deter future false claims by Halper and others.

But it will deter by punishing.

As this Court noted in Bell v. Wolfish, deterrence is

“not a legitimate non-punitive governmental objective. “

It’s a punitive objective.

The catch is, of course, that Halper has already been punished and can’t be punished again.

The government relies on the distinction between criminal and civil proceedings.

It says that it can punish you twice in successive proceedings so long as in one of those proceedings the punishment is imposed in a civil forum.

Initially, I think there’s something very counter-intuitive about that argument.

The government agrees that it can’t punish you twice in two successive criminal prosecutions, in each of which the defendant would enjoy all the protections of criminal due process, the right to make the government prove its case beyond a reasonable doubt, the privilege against self-incrimination, the right to call and confront witnesses.

Under the government’s theory it can punish you twice in successive proceedings but only so long as you don’t have those protections in one of the proceedings.

William H. Rehnquist:

Well, what does your argument do, Mr. Roberts, to the punitive damages that… that are awarded in many civil actions?

John G. Roberts, Jr.:

Well, I think in a typical civil action where it is brought by a private party, it wouldn’t implicate the Double Jeopardy Clause at all.

It would only be… only come into play if the government, after punishing a defendant, sought punitive damages–

William H. Rehnquist:

So, the… the action of a governmental court in awarding the damages does not make it subject to any sort of a–

John G. Roberts, Jr.:

–No, Your Honor, I don’t think that would be enough to trigger the Double Jeopardy Clause.

Anthony M. Kennedy:

–Well, suppose the city is injured in an antitrust action, and there’s a criminal antitrust prosecution, and then the state or the city sues and gets triple damages.

Is that… is that a violation?

John G. Roberts, Jr.:

It would depend, Your Honor, on whether the triple damages exceeded the costs of investigating and prosecuting the violation.

I think the same analysis–

Anthony M. Kennedy:

So… so, in your view antitrust damages under the… under the Sherman Act, when the city is injured, cannot be tripled automatically.

You have to… there has to be a showing that the cost of investigation is… is… is reasonably comprehended within the triple amount?

John G. Roberts, Jr.:

–It the only rationale that can be advanced on the facts for the triple damages is punitive, punishment, then the same analysis would apply because the defendant would already have been punished–

Anthony M. Kennedy:

Well, what is their rationale for triple damages under… under the Sherman Act?

John G. Roberts, Jr.:

–[inaudible].

Anthony M. Kennedy:

It’s… there’s a large deterrence rationale that has a civil… that has a civil consequence, isn’t there?

John G. Roberts, Jr.:

I think so.

Perhaps they could be justified as an incentive to bring these sorts of suits, but I think in most cases they would be punitive, and this… this analysis would apply.

John G. Roberts, Jr.:

Now, it’s not likely to present problems on the facts because… look at this case, for example.

Triple damages would have been $1,755.

Anthony M. Kennedy:

No, but an antitrust suit’s triple damages can be astronomic and generally, I… I would assume, are well in excess of the costs of investigation and prosecution.

You get attorney’s fees in addition, don’t you, under the Antitrust Act?

John G. Roberts, Jr.:

Under the… under the Sherman Act.

I suppose, though, as the damages increased, perhaps the costs of investigation and prosecution of the antitrust case is, of course, very… unlike this one… very complex.

Anthony M. Kennedy:

But you’re willing to make your case here rise or fall on the… whether or not triple damages can be granted to a government after a criminal prosecution?

John G. Roberts, Jr.:

Well, I think the analysis does apply.

There may be a difference to the extent that the formula of triple damages is related to the government’s loss and perhaps in that sort of a case, Congress could say triple damages will cover the costs of investigation and prosecution.

But this formula is completely unrelated to the government’s loss.

It’s… it’s $2,000 per count regardless of how small the damage or how great.

One count fraud of $1 million gets you a $2,000 penalty, and Halper’s $585 in false claims, of course, netted him a hundred–

John Paul Stevens:

Mr. Roberts, isn’t there another difference too on the triple damages setting?

The triple damages are paid to a private third party, but when the United States recovers damages after a conviction, they only get single damages, don’t they?

John G. Roberts, Jr.:

–Well, in that… that’s true, and that might further support a remedial rationale.

I know in… in United States v. Ward, for example, the government noted that the penalty that was assessed went into a revolving fund that helped clean up the… the oil spills.

Sandra Day O’Connor:

Doesn’t this statute permit private suits for recovery?

John G. Roberts, Jr.:

There is a qui tam provision–

Sandra Day O’Connor:

All right.

John G. Roberts, Jr.:

–in which–

Sandra Day O’Connor:

And so what happens if a private person were here instead of the government seeking triple the penalty?

John G. Roberts, Jr.:

–Well, the analysis would still be the same.

The… the amount the government sets–

Sandra Day O’Connor:

So, if a private person brings it under this statute, you would still be arguing that it’s invalid and the court has to look at the amount.

John G. Roberts, Jr.:

–Well, it… it may be distinguishable.

If you look back at the government’s brief in the Hess case, for example, they had no doubt that… there that the penalty was, in essence, criminal.

The only thing they were concerned about was whether a private party could bring this suit and there somehow prevent the government from bringing a criminal prosecution.

Under this–

Sandra Day O’Connor:

It’s rather odd to apply a double jeopardy analysis if… if the suit is brought by a private person, isn’t it?

John G. Roberts, Jr.:

–I think so, and I… and I don’t think, for example, it would apply in a case in which a private individual brings the antitrust action after a government prosecution under the Sherman Act.

John G. Roberts, Jr.:

And the current statute has very elaborate protective mechanisms in which the government can prevent a private qui tam action from interfering with any proceeding it may… it may wish to bring.

The… the government–

Sandra Day O’Connor:

That would have the quixotic effect of if the government brought the civil penalty action and… and sought the statutory amount of the penalty, you would urge a double jeopardy application.

But if a private person brought the action and sought triple the amount, then no double jeopardy application.

John G. Roberts, Jr.:

–I think that conclusion follows from the assumption that the Double Jeopardy Clause doesn’t… is an inhibition on government action and doesn’t preclude private actions for… for damages.

The… the government relies–

Antonin Scalia:

Then you’d say that there may be other limitations on the level of private actions that may be allowed, but not the Double Jeopardy Clause.

John G. Roberts, Jr.:

–Well, that’s right.

I know the… the Court has the… the Browning-Ferris case coming up in which it will decide whether the excessive fines provision applies to private actions.

But I don’t think that’s… that’s implicated here.

Antonin Scalia:

The fine can be a fine even though not assessed in a… it possibly can be a fine for that purpose even though not assessed in a criminal proceeding.

John G. Roberts, Jr.:

That’s the… the argument I think in the… in the Browning-Ferris case, yes, which depending on how it comes out, would make… could lead to a curious result here.

If the… the Eighth Amendment doesn’t apply at all to civil proceedings, then there’s not even that limit on the extent of the civil punishment the government can impose.

And if it does apply in the civil proceeding, then the government presumably would say that this isn’t punishment until it becomes excessive punishment, which would be an odd result.

There is no natural cutoff.

My brother today mentioned that there will come a point at which the recovery may be so excessive, but there’s no logical way to draw that point other than the… the line that was drawn in Hess and in Rex Trailer when the amount exceeds the remedial purpose.

When it’s no longer compensatory, then it is a second punishment.

And the fact that it’s imposed in a civil forum makes no difference for the application of the Double Jeopardy Clause.

It makes no difference to the defendant whether this $130,000 penalty, the second punishment, is called criminal or civil because he has already been criminally convicted of the underlying offense.

The government refers to the greater stigma, the moral condemnation, that attaches to a criminal punishment.

But that argument simply doesn’t work in this case.

The issue is not whether Halper is going to be stigmatized or morally condemned.

We know the answer to that.

He is for precisely these same false claims.

The issue is how many different times the government can punish him as a result of that moral condemnation, and the answer in the Double Jeopardy Clause is once.

The government’s focus on the distinction between criminal and civil is… is misdirected.

Under the Double Jeopardy Clause, as this Court has frequently noted, there are three distinct protections: protects against a second prosecution after an acquittal, protects against a second prosecution after a conviction, and it protects against multiple punishments for the same offense.

Now, when the first two of those protections are at issue, you need to know if it’s a prosecution.

Is this an inherently criminal proceeding?

But when the third protection is at issue, you simply need to know if it’s a multiple punishment, if he’s being punished a second time.

John G. Roberts, Jr.:

Finally, the government argues for reversal with a parade of… of horribles, all these routine civil sanctions after a conviction that will supposedly go out the door if the judgment is affirmed.

For example, it cites in its reply brief debarment from further government contracting, loss of a professional license, disbarment.

The decision below will not at all threaten those routine sanctions.

In each case, those sanctions can be justified with reference to a remedial objective: in the case of debarment, maintaining the integrity of the government contracting programs; in the case of disbarment, maintaining public confidence in the integrity of the bar.

Here there is no remedial justification for the $130,000 penalty.

It is punishment pure and simple.

Finally, the decision below will not upset the government’s efforts to stamp out false claims.

It can bring a criminal action and get what are now very high fines, up to $250,000 per count, and then later bring a civil proceeding in which the defendant is collaterally estopped to collect all its damages, all its costs.

Or it can bring the civil proceeding separately.

I don’t think anything in the holding below means that the government cannot collect this penalty in a civil proceeding.

It just means if he has already been punished, this is punishment and can’t be brought–

William H. Rehnquist:

It would also mean that the civil proceeding wouldn’t be a civil proceeding, wouldn’t it, that you have to have a reasonable doubt standard and all the safeguards that apply in a criminal trial?

John G. Roberts, Jr.:

–No, Your Honor, I don’t think it means that.

The… the district court did refer to this as a criminal penalty.

But there’s nothing in the logic of his decision that says you can’t bring this alone.

The key to his conclusion was this was multiple punishment.

This was a second punishment.

I think it’s a very different question whether it could be punished… whether you could be punished in a civil forum alone without the prior criminal conviction and punishment.

William H. Rehnquist:

That would be a rather strange animal.

John G. Roberts, Jr.:

Well–

Antonin Scalia:

It’s a strange dichotomy you’re giving us here.

You’re… you’re saying this is bad because he has been convicted criminally, although they could have made this an additional part of the criminal penalty.

They could have easily said in addition to the criminal fine already allowed, you will be fined $2,000 per… per offense.

You acknowledge that would be okay.

John G. Roberts, Jr.:

–Yes, Your Honor.

Antonin Scalia:

That wouldn’t be cruel or unusual.

It wouldn’t be excessive or anything if it were done in the criminal case.

So–

John G. Roberts, Jr.:

And the government makes that argument.

Antonin Scalia:

–But… but only because he has been convicted criminally already, it’s bad here.

Antonin Scalia:

Had he not been… had there not been any criminal offense involved, the government could have… could have assessed this civil penalty without any problem.

Is that right?

John G. Roberts, Jr.:

I… I think it… it may well have.

There’s nothing in the decision–

Antonin Scalia:

That’s strange.

I think that’s a strange result.

John G. Roberts, Jr.:

–below that… you don’t have to conclude that this proceeding is inherently criminal to recognize that it does impose a second punishment.

The second punishment is enough to give you the double jeopardy violation.

There may be other questions to consider in concluding that it’s an inherently criminal prosecution.

Byron R. White:

If there hadn’t been a… if there weren’t a prior criminal case, you wouldn’t say that the government could collect this $132,000 in a civil case.

John G. Roberts, Jr.:

It would be a very different question because you–

Byron R. White:

I didn’t… I didn’t want to… what would be your answer?

Would they… would there–

John G. Roberts, Jr.:

–I think–

Byron R. White:

–Wouldn’t… wouldn’t the court say, well, this is punishment and you can’t collect it?

John G. Roberts, Jr.:

–I think that would be a very reasonable conclusion on the facts, given the disparity between recovery and… and punishment.

But it’s not a necessary conclusion.

I think once you see that punishment has been imposed, the double jeopardy analysis is at an end, and you don’t have to go further and say is this criminal punishment or is it civil punishment.

The government says that it could have sought the civil penalty in the same proceeding with the criminal prosecution and then says why can’t we seek them separately.

I think that conclusion misses the entire point of the Double Jeopardy Clause which is that there are things you cannot do twice that you can do once.

Whether the government could have sought this civil penalty together with the criminal fine and the sentence of imprisonment is entirely unrelated to the question of whether they can break it up and bring this additional punishment, punishment which follows automatically from the criminal conviction and the criminal prosecution in a separate proceeding.

The district court’s decision that the Double Jeopardy Clause would be violated by the excessive punishment was correct and the judgment should be affirmed.

William H. Rehnquist:

Thank you, Mr. Roberts.

Mr. Dreeben, you have nine minutes remaining.

REBUTTAL ARGUMENT OF MICHAEL R. DREEBEN–

Michael R. Dreeben:

Thank you, Your Honor.

Amicus focuses his argument solely on the proposition that if the second proceeding involves punishment, then it is barred by the Double Jeopardy Clause.

And he defines punishment to mean anything in addition to what the government can actually show are its out-of-pocket, actual losses.

This Court in the Hess case considered the identical argument to that and held that to the extent that a second action does impose some punishment, that is not enough to declare it a criminal sanction.

And the Double Jeopardy Clause’s concern is with a second criminal sanction, not with a second proceeding that may to some extent impose punishment.

Michael R. Dreeben:

The Sherman Act treble damages remedy in punitive damages cannot be adequately differentiated merely because the government is not a party because amicus has argued that the prospective must be from the defendant, and the defendant experiences either second proceeding as punishment.

William H. Rehnquist:

–It… it is true what… what amicus says that the Double Jeopardy Clause applies to the government–

Michael R. Dreeben:

That’s correct.

William H. Rehnquist:

–and not… not to private parties.

Michael R. Dreeben:

That’s true, but the punishment in this case, if there is some, would be awarded by the court pursuant to a statute passed by Congress, and there’s no reason why the Double Jeopardy Clause would not be concerned with it.

The Hess case itself involved a qui tam plaintiff, and the Court considered and evaluated the Double Jeopardy Clause even though the arguments were presented in the brief that the Double Jeopardy Clause might not have a role to play in that setting.

William H. Rehnquist:

In other words, any civil plaintiff who obtains punitive damages from a court is perhaps violating the Double Jeopardy Clause?

Michael R. Dreeben:

No, Your Honor, we don’t believe that it does violate the Double Jeopardy Clause for any civil action to follow a criminal one even if there is a recovery above and beyond actual damages because that is not the line that the Double Jeopardy Clause draws.

It protects against a second criminal proceeding because the Constitution draws a line between criminal and civil proceedings and determines that criminal proceedings have more severe consequences, but it does not bar a second civil sanction that can be imposed after the earlier criminal conviction.

John Paul Stevens:

Isn’t there another factor in the… in the qui tam action and in the treble damage antitrust actions that the extra recovery is partially justified as an incentive for the third private party to bring the action?

So, it’s not strictly compensatory, but yet it… it pays for getting something done by getting the third party activated in the matter.

Michael R. Dreeben:

Yes, it does, Your Honor, but in… in the case where a criminal conviction has already happened and the private plaintiff brings the treble damages action, he’s entitled to rely on the facts established in the criminal trial.

And the wrongdoer has already been exposed, so the costs of investigation would be far less in that kind of a–

John Paul Stevens:

No, that’s true.

But there’s still the incentive.

If you’re going to get treble damages instead of single damages, there’s much more… greater motivation to bring the action.

Michael R. Dreeben:

–That’s true, Your Honor, but the same incentives exist in this case because if the government did not have the opportunity to recover penalties, it would be virtually incapable of prosecuting small frauds like this because the costs of prosecuting them would far outweigh the costs of investigating.

John Paul Stevens:

But what is the maximum criminal fine you could recover?

Michael R. Dreeben:

There is a $250,000 per count penalty that could be–

John Paul Stevens:

You could recover a lot of money in the criminal proceeding.

Michael R. Dreeben:

–That’s correct, but under the Sentencing Commission guidelines, the fine would be assessed by looking in part at the actual damage to the government.

John Paul Stevens:

Well–

Michael R. Dreeben:

So, it’s a very different formula that has been prescribed.

But the fact that there is such a broad difference between what can be recovered in a criminal proceeding and what the civil proceeding allows in terms of a penalty helps underscore that the civil proceeding does have a different purpose and a different effect.

Antonin Scalia:

–Does the Sentencing Commission consider civil penalties in… in formulating its guidelines for… for criminal fines?

Michael R. Dreeben:

Not to my knowledge, Your Honor.

There… there are other statutes where Congress has provided different kinds of formulas to attack this kind of wrongdoing.

There’s more than one way to skin a cat in this setting, and Congress has provided for a mandatory, fixed-sum penalty in this act; in other acts, has provided for more discretion.

There is currently discretion between $5,000 and $10,000 under the False Claims Act.

But Congress is trying to do what it can to come up with adequate methods both to compensate and to deter.

Antonin Scalia:

That… that discretion will presumably be… be limited by the… by the Commission, the Sentencing Commission, won’t it?

Michael R. Dreeben:

Under the False Claims Act on the civil side, the Sentencing Commission would not have jurisdiction over it, only on the criminal side.

Amicus argues that the costs of investigation in this case were relatively small because the fraud was relatively simple.

The record in the civil case was not developed on the question of what sort of Investigation occurred.

But the record in the criminal case shows that an extensive investigation was necessary to bring this episode of wrongdoing to light.

It’s not a simple matter of looking on the face of the claim form and determining whether or not there was a fraud.

To begin with, Medicare does not… and its fiscal intermediaries don’t even review each form.

They rely on an honor system.

But more fundamentally, there was a need to determine whether in fact the services were performed that Mr. Halper claimed he had performed and attempting to determine the magnitude of the problem because the government is not–

Sandra Day O’Connor:

But if all that has been done under the criminal case, it’s hard to see how… how the costs would be substantial for the civil prosecution… the civil action.

Michael R. Dreeben:

–The civil action’s costs are less than the criminal prosecution, but there were still costs of–

Sandra Day O’Connor:

And you can rely on… on the conviction obtained–

Michael R. Dreeben:

–Yes.

–in the criminal case.

Michael R. Dreeben:

To establish liability, that’s correct.

Sure.

Michael R. Dreeben:

Not to find assets which is a problem that frequently complicates civil actions of this nature.

But the government is forced to devote an enormous amount of resources to trying to figure out in the first place is this a fraud.

Is it a fraud that’s worth prosecuting?

It doesn’t prosecute cases that involve one or two accidental misstatements on a Medicare form.

It has to determine whether–

Sandra Day O’Connor:

That was all done in the criminal case.

Michael R. Dreeben:

–That’s true, Your Honor, and the government has never been compensated for that.

And under the judgment below, the–

Sandra Day O’Connor:

But, in theory, it could be under the sentencing guidelines, presumably.

Michael R. Dreeben:

–The sentencing guidelines are not structured to compensate the government for its costs of investigation and prosecution.

They simply don’t work that way.

The focus of the criminal episode is really to punish the defendant.

The focus of this kind of proceeding is to ensure that the government is compensated for the problem and to have a deterrent mechanism in place to prevent successive types of frauds like this.

Antonin Scalia:

It is the government’s position, though, that even if the government had lost the criminal prosecution, it could then have brought this action with a burden of proof not beyond a reasonable doubt, but just more likely than not, and imposed the… the level of fines that are at issue here.

Michael R. Dreeben:

That’s right, Your Honor, whether or not there has been a prior criminal–

John Paul Stevens:

Because this is not a criminal case.

Michael R. Dreeben:

–That’s correct.

Antonin Scalia:

This is just… just compensation to the government.

Michael R. Dreeben:

That’s correct.

It could go either way on that point.

We believe that the result that the district court reached in this case would require each court to speculate in each case about what the government’s true damages were before it could decide whether the False Claims Act were civil or criminal in a given setting or, alternatively, it would force the government to attempt to quantify exactly how much it had spent in attorney time, how much it had spent in investigatory time, which is simply not a process that can reasonably be done.

It’s precisely the reason why liquidated damages are provided in contracts.

This is not a direct… it’s not directly identical to liquidated damages because Congress is legislating for a broad category of cases.

John Paul Stevens:

Of course, it’s not unusual to provide in a statute that the plaintiff recovers single, treble damages, plus attorney’s fees, plus costs of suit.

Michael R. Dreeben:

That’s correct.

John Paul Stevens:

So, you can… I mean, that would not be an unusual statute to say government can recover its costs and they have to prove them.

Michael R. Dreeben:

That’s correct, but costs are usually a very small component of the actual development of a case and bringing it to trial.

Costs that are recoverable in a civil action are really limited to the costs that you incur.

John Paul Stevens:

But you… you haven’t really called our attention to anything that suggests that the… the government… the statute was designed to enable the government to recover the costs of running the government, including its fraud investigation and all the rest, have you?

Michael R. Dreeben:

Congress did not specifically itemize those kinds of issues.

It did rely–

John Paul Stevens:

Well, they didn’t even mention it, did they?

Michael R. Dreeben:

–It didn’t… it mentioned it to the extent that it alluded to the Hess case and it approved of the rationale of the Hess case.

John Paul Stevens:

Yes, which was… you had to pay the informer half of the recovery there.

Michael R. Dreeben:

Your Honor, the… Court’s reasoning did not rely on the qui tam provision in that setting.

William H. Rehnquist:

Thank you, Mr. Dreeben.

The case is submitted.