Allison Engine Co. v. United States ex rel. Sanders
Encyclopedia
Allison Engine Co. v. United States ex rel
. Sanders, No. 07-214, 553 U.S. 662 (2008), was a decision by the Supreme Court of the United States
holding that plaintiffs under the False Claims Act
must prove that the false claim was made with the specific intent of inducing the government to pay or approve payment of a false or fraudulent claim, rather than merely defrauding a contractor. Congress overruled this decision with the Fraud Enforcement and Recovery Act of 2009
.
and Ingalls Shipbuilding
began construction on a new fleet of destroyers for the United States Navy
. Allison Engine was subcontracted to build generator sets for these ships, and General Tool Company was hired by Allison to assemble the system. The terms of the contracts required that the work meet strict Navy specifications. Two former employees of General Tool, Roger L. Sanders and Roger L. Thacker, filed suit in the Southern District of Ohio
under the False Claims Act, alleging that Allison, General Tool, and other subcontractors had knowingly submitted invoices to the shipyards for work which did not meet the Navy requirements, and that the contractors had issued false certificates of compliance with those specifications. Sanders and Thacker, as qui tam
relators, would be entitled to a portion of the government's recovery from the contractors if they prevailed in the suit.
The False Claims Act provided:
At trial, the plaintiffs introduced as evidence the alleged false invoices, but did not provide evidence of false invoices from the shipyards to the Navy. The contractor defendants moved for judgment on the grounds that the plaintiffs had not introduced any evidence of any false claims made to the Federal government. The trial court, interpreting the language of the False Claims Act, agreed and entered judgment in favor of the defendants. On appeal, the Sixth Circuit Court of Appeals
reversed the trial court, deciding that it was sufficient for the plaintiffs to prove that a false claim would be paid with government money, even if it was not paid directly by the government.
to consider what the appropriate standard for cases under §3729(a)(2) of the False Claims Act should be, and to resolve a conflict among the circuit courts. The D.C. Circuit
had already decided a similar case, United States ex rel. Totten v. Bombardier Corp., 380 F. 3d 488 (CADC 2004), finding (contrary to the Sixth Circuit) that intent for the false claim to be paid by the government was an essential element of §3729(a)(2). In their briefs to the Supreme Court, the petitioners argued that a §3729(a)(2) action must include the element of presentment: that the false claim must be made directly to the government. The government, as respondent, argued by contrast that the words “paid or approved by the Government” in the statute should be read to include any payment made with government money, however indirectly.
Writing for a unamious court, Justice Samuel Alito
notes that, "[w]hile §3729(a)(1) requires a plaintiff to prove that the defendant “present[ed]” a false or fraudulent claim to the Government, the concept of presentment is not mentioned in §3729(a)(2)." He concludes:
The Court also considered a conspiracy claim under §3729(a)(3), and concluded that the language of that clause was sufficiently similar to clause (a)(2) that the same principle should apply. The judgment of the Sixth Circuit was vacated and the case remanded for further consideration.
, Pub.L. 111-21, restates the False Claims Act, replacing §3729(a)(2) with a reading closer to that advocated by the government in Allison Engine:
This has the effect of reversing the Supreme Court's decision by eliminating the specific language on which Allison Engine was decided, and thereby cease "allowing subcontractors and non-governmental entities to escape responsibility for proven frauds".
Ex rel
Ex rel is an abbreviation of the Latin phrase "ex relatione" meaning "by the relation of" . The term is a legal phrase most commonly used when a government brings a cause of action upon the request of a private party who has some interest in the matter. The private party is called the relator in...
. Sanders, No. 07-214, 553 U.S. 662 (2008), was a decision by the Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
holding that plaintiffs under the False Claims Act
False Claims Act
The False Claims Act is an American federal law that imposes liability on persons and companies who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government...
must prove that the false claim was made with the specific intent of inducing the government to pay or approve payment of a false or fraudulent claim, rather than merely defrauding a contractor. Congress overruled this decision with the Fraud Enforcement and Recovery Act of 2009
Fraud Enforcement and Recovery Act of 2009
The Fraud Enforcement and Recovery Act of 2009, or FERA, , is a public law in the United States enacted in 2009. The law enhanced criminal enforcement of federal fraud laws, especially regarding financial institutions, mortgage fraud, and securities fraud or commodities fraud.-Legislative history:U.S...
.
Prior history
In 1985, Bath Iron WorksBath Iron Works
Bath Iron Works is a major American shipyard located on the Kennebec River in Bath, Maine, United States. Since its founding in 1884 , BIW has built private, commercial and military vessels, most of which have been ordered by the United States Navy...
and Ingalls Shipbuilding
Ingalls Shipbuilding
Ingalls Shipbuilding is a shipyard located in Pascagoula, Mississippi, USA, originally established in 1938, and is now part of Huntington Ingalls Industries...
began construction on a new fleet of destroyers for the United States Navy
United States Navy
The United States Navy is the naval warfare service branch of the United States Armed Forces and one of the seven uniformed services of the United States. The U.S. Navy is the largest in the world; its battle fleet tonnage is greater than that of the next 13 largest navies combined. The U.S...
. Allison Engine was subcontracted to build generator sets for these ships, and General Tool Company was hired by Allison to assemble the system. The terms of the contracts required that the work meet strict Navy specifications. Two former employees of General Tool, Roger L. Sanders and Roger L. Thacker, filed suit in the Southern District of Ohio
United States District Court for the Southern District of Ohio
The United States District Court for the Southern District of Ohio is one of two United States district courts in Ohio and includes forty-eight of the state's eighty-eight counties. Appeals from the court are taken to the United States Court of Appeals for the Sixth Circuit at Cincinnati The...
under the False Claims Act, alleging that Allison, General Tool, and other subcontractors had knowingly submitted invoices to the shipyards for work which did not meet the Navy requirements, and that the contractors had issued false certificates of compliance with those specifications. Sanders and Thacker, as qui tam
Qui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
relators, would be entitled to a portion of the government's recovery from the contractors if they prevailed in the suit.
The False Claims Act provided:
At trial, the plaintiffs introduced as evidence the alleged false invoices, but did not provide evidence of false invoices from the shipyards to the Navy. The contractor defendants moved for judgment on the grounds that the plaintiffs had not introduced any evidence of any false claims made to the Federal government. The trial court, interpreting the language of the False Claims Act, agreed and entered judgment in favor of the defendants. On appeal, the Sixth Circuit Court of Appeals
United States Court of Appeals for the Sixth Circuit
The United States Court of Appeals for the Sixth Circuit is a federal court with appellate jurisdiction over the district courts in the following districts:* Eastern District of Kentucky* Western District of Kentucky...
reversed the trial court, deciding that it was sufficient for the plaintiffs to prove that a false claim would be paid with government money, even if it was not paid directly by the government.
Case
The Supreme Court granted certiorariCertiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
to consider what the appropriate standard for cases under §3729(a)(2) of the False Claims Act should be, and to resolve a conflict among the circuit courts. The D.C. Circuit
United States Court of Appeals for the District of Columbia Circuit
The United States Court of Appeals for the District of Columbia Circuit known informally as the D.C. Circuit, is the federal appellate court for the U.S. District Court for the District of Columbia. Appeals from the D.C. Circuit, as with all the U.S. Courts of Appeals, are heard on a...
had already decided a similar case, United States ex rel. Totten v. Bombardier Corp., 380 F. 3d 488 (CADC 2004), finding (contrary to the Sixth Circuit) that intent for the false claim to be paid by the government was an essential element of §3729(a)(2). In their briefs to the Supreme Court, the petitioners argued that a §3729(a)(2) action must include the element of presentment: that the false claim must be made directly to the government. The government, as respondent, argued by contrast that the words “paid or approved by the Government” in the statute should be read to include any payment made with government money, however indirectly.
Writing for a unamious court, Justice Samuel Alito
Samuel Alito
Samuel Anthony Alito, Jr. is an Associate Justice of the U.S. Supreme Court. He was nominated by President George W. Bush and has served on the court since January 31, 2006....
notes that, "[w]hile §3729(a)(1) requires a plaintiff to prove that the defendant “present[ed]” a false or fraudulent claim to the Government, the concept of presentment is not mentioned in §3729(a)(2)." He concludes:
The Court also considered a conspiracy claim under §3729(a)(3), and concluded that the language of that clause was sufficiently similar to clause (a)(2) that the same principle should apply. The judgment of the Sixth Circuit was vacated and the case remanded for further consideration.
Subsequent events
The Fraud Enforcement and Recovery Act of 2009Fraud Enforcement and Recovery Act of 2009
The Fraud Enforcement and Recovery Act of 2009, or FERA, , is a public law in the United States enacted in 2009. The law enhanced criminal enforcement of federal fraud laws, especially regarding financial institutions, mortgage fraud, and securities fraud or commodities fraud.-Legislative history:U.S...
, Pub.L. 111-21, restates the False Claims Act, replacing §3729(a)(2) with a reading closer to that advocated by the government in Allison Engine:
This has the effect of reversing the Supreme Court's decision by eliminating the specific language on which Allison Engine was decided, and thereby cease "allowing subcontractors and non-governmental entities to escape responsibility for proven frauds".