Supreme Court and False Claims Act

The Supreme Court granted certiorari today (Oct. 29) to the contractor in a False Claims Act case, Allison Engine v. Sanders, on appeal from the Sixth Circuit [United States ex rel. Sanders v. Allison Engine, 471 F.3d 610 (6th Cir. 2006)]. This concerns the presentment requirement of the FCA.

The Sixth Circuit held, in a split opinion, that the FCA applies not only to claims presented by a contractor to the federal government, but also to claims presented by a subcontractor to the prime contractor, even though the latter claims are not directly presented to the federal government. The Sixth Circuit's reasoning was that the government is still defrauded, even indirectly. Judge Ellis (E.D. Va.) reached the opposite result in one of the Iraqi contractor cases (Custer Battles), which is now on appeal to the Fourth Circuit.

An exceprt of the Sixth Circuit's decision is below, and online at:

http://www.ca6.uscourts.gov/opinions.pdf/06a0463p-06.pdf 

The first action (referred to by the parties as the "Quality Case") alleges that the defendants submitted claims for payment despite knowing that the Gen-Sets did not conform to contract specifications or Navy regulations, in violation of the False Claims Act, 31 U.S.C. § 3729(a)(1)-(3). The district court construed § 3729 to require a showing that a false claim had actually been presented to the United States government ("government") for liability to attach. Because relators made no such showing at trial, the court granted judgment as a matter of law to the defendants at the close of relators' case pursuant to Fed. R. Civ. P. 50(a). We can discern no presentment requirement in § 3729(a)(2) or (3), and reviewing de novo, see Gray v. Toshiba Am. Consumer Prods., 263 F.3d 595, 598 (6th Cir. 2001), we find this ruling to be in error and reverse.

Alan R. Kabat, Bernabei & Wachtel, PLLC