United States v. Halper

Decision Date15 May 1989
Docket NumberNo. 87-1383,87-1383
Citation104 L.Ed.2d 487,109 S.Ct. 1892,490 U.S. 435
PartiesUNITED STATES, Appellant v. Irwin HALPER
CourtU.S. Supreme Court
Syllabus

After respondent, the manager of a company which provided medical services for patients eligible for federal Medicare benefits, was convicted, inter alia, of submitting 65 false claims for Government reimbursement in violation of the federal criminal false-claims statute, he was sentenced to prison and fined $5,000. Based solely on facts established by h § criminal conviction, the District Court then granted the Government summary judgment in its suit against him under the federal civil False Claims Act (Act). Under the strict terms of that Act's remedial provision, as it then existed, respondent would have been liable for a civil penalty of $2,000 on each of the 65 false claims, as well as for twice the amount of the Government's actual damages of $585 and the costs of the action. However, because the statutorily authorized recovery of more than $130,000 bore no "rational relation" to the sum of the Government's actual loss plus its costs in investigating and prosecuting the false claims, which the court approximated at no more than $16,000, the court held that imposition of the full statutory amount would violate the Double Jeopardy Clause of the Fifth Amendment by punishing respondent a second time for the same conduct for which he had been convicted. Since it considered the Act unconstitutional as applied to respondent, the court limited the Government's recovery to double damages and costs. The Government took a direct appeal to this Court.

Held: The statutory penalty authorized by the Act, as applied to respondent, violates the Double Jeopardy Clause. Pp. 440-452.

(a) Although Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917, United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443, and Rex Trailer Co. v. United States, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149, establish that proceedings and penalties under the Act are civil in nature, and that a civil remedy does not constitute multiple punishment violative of the Clause merely because Congress provided for civil recovery in excess of the Government's actual damages, those cases did not consider and do not foreclose the possibility that in a particular case a civil penalty authorized by the Act may be so extreme and so divorced from the Government's actual damages and expenses as to constitute prohibited "punishment." Pp. 440-446.

(b) In the rare case such as the present, where a prolific but small-gauge offender previously has sustained a criminal penalty, and the civil penalty sought in a subsequent proceeding bears no rational relation to the goal of compensating the Government for its loss, but rather appears to qualify as "punishment" in the plain meaning of the word, the defendant is entitled to an accounting of the Government's damages and costs in order to allow the trial court, in its discretion, to determine whether the penalty sought in fact constitutes a second punishment violative of the Clause and to set the size of the civil sanction the Government may receive without crossing the line between permissible remedy and prohibited punishment. Pp. 446-451.

(c) While the District Court correctly found that the disparity between its approximation of the Government's costs and respondent's statutory liability is sufficiently disproportionate that the sanction provided by the Act constitutes a second punishment violative of double jeopardy, the case is remanded to permit the Government to demonstrate that that court's assessment of its injuries was erroneous, since it would be unfair to deprive the Government of an opportunity to present an accounting of its actual costs arising from respondent's fraud, to seek an adjustment of the court's approximation, and to recover demonstrated costs. P. 452.

664 F.Supp. 852 (S.D.N.Y.1987), vacated and remanded.

BLACKMUN, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion, post, p. ----.

Michael R. Dreeben, for appellant.

John G. Roberts, Jr., Washington, D.C., for appellee.

Justice BLACKMUN delivered the opinion of the Court.

In this case, we consider whether and under what circumstances a civil penalty may constitute "punishment" for the purposes of double jeopardy analysis.1

I

Respondent Irwin Halper worked as manager of New City Medical Laboratories, Inc., a company which provided medical service in New York City for patients eligible for benefits under the federal Medicare program. In that capacity, Halper submitted to Blue Cross and Blue Shield of Greater New York, a fiscal intermediary for Medicare, 65 separate false claims for reimbursement for service rendered. Specifically, on 65 occasions during 1982 and 1983, Halper mischaracterized the medical service performed by New City, demanding reimbursement at the rate of $12 per claim when the actual service rendered entitled New City to only $3 per claim. Duped by these misrepresentations, Blue Cross overpaid New City a total of $585; Blue Cross passed these overcharges along to the Federal Government.2

The Government became aware of Halper's actions and in April 1985 it indicted him on 65 counts of violating the criminal false-claims statute, 18 U.S.C. § 287, which prohibits "mak[ing] or present[ing] . . . any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent." Halper was convicted on all 65 counts, as well as on 16 counts of mail fraud. He was sentenced in July 1985 to imprisonment for two years and fined $5,000.

The Government then brought the present action in the United States District Court for the Southern District of New York against Halper and another, who later was dismissed from the case, see App. 21, 36, under the civil False Claims Act, 31 U.S.C. §§ 3729-3731. That Act was violated when "[a] person not a member of an armed force of the United States . . . (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved." § 3729. Based on facts established by Halper's criminal conviction and incorporated in the civil suit, the District Court granted summary judgment for the Government on the issue of liability. 660 F.Supp. 531, 532-533 (1987).

The court then turned its attention to the remedy for Halper's multiple violations. The remedial provision of the Act stated that a person in violation is "liable to the United States Government for a civil penalty of $2,000, an amount equal to 2 times the amount of damages the Government sustains because of the act of that person, and costs of the civil action." 31 U.S.C. § 3729 (1982 ed., Supp. II).3 Having violated the Act 65 separate times, Halper thus appeared to be subject to a statutory penalty of more than $130,000.

The District Court, however, concluded that in light of Halper's previous criminal punishment, an additional penalty this large would violate the Double Jeopardy Clause. Although the court recognized that the statutory provisions for a civil sanction of $2,000 plus double damages for a claims violation was not in itself criminal punishment, it concluded that this civil remedy, designed to make the Government whole, would constitute a second punishment for double jeop- ardy analysis if, in application, the amount of the penalty was "entirely unrelated" to the actual damages suffered and the expenses incurred by the Government. 660 F.Supp., at 533. In the District Court's view, the authorized recovery of more than $130,000 bore no "rational relation" to the sum of the Government's $585 actual loss plus its costs in investigating and prosecuting Halper's false claims. Ibid. The court therefore ruled that imposition of the full amount would violate the Double Jeopardy Clause by punishing Halper a second time for the same conduct. To avoid this constitutional proscription, the District Court read the $2,000-per-count statutory penalty as discretionary and, approximating the amount required to make the Government whole, imposed the full sanction for only 8 of the 65 counts. The court entered summary judgment for the Government in the amount of $16,000. Id., at 534.

The United States, pursuant to Federal Rule of Civil Procedure 59(e), moved for reconsideration. The motion was granted. On reconsideration, the court confessed error in ruling that the $2,000 penalty was not mandatory for each count. 664 F.Supp. 852, 853-854 (1987). It remained firm, however, in its conclusion that the $130,000 penalty could not be imposed because, in the circumstances before it, that amount would violate the Double Jeopardy Clause's prohibition of multiple punishments. Ibid. Looking to United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943), for guidance, the court concluded that, although a penalty that is more than the precise amount of actual damages is not necessarily punishment, a penalty becomes punishment when, quoting Justice Frankfurter's concurrence in Hess, id., at 554, 63 S.Ct., at 389, it exceeds what " 'could reasonably be regarded as the equivalent of compensation for the Government's loss.' " 664 F.Supp., at 854. Applying this principle, the District Court concluded that the statutorily authorized penalty of $130,000, an amount more than 220 times greater than the Government's measurable loss, qualified as punishment which, in view of Halper's previous criminal conviction and sentence, was barred by the Double Jeopardy Clause. Because it considered the Act unconstitutional as applied to Halper, the District Court amended its judgment to limit the Government's recovery to double damages of $1,170 and the costs of the civil action. Id., at 855.

The United States, pursuant to 28 U.S.C. § 1252, took a direct appeal to this Court. We noted probable jurisdiction, 486...

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