Allison Engine Co. v. United States Ex Rel. Sanders
170 L. Ed. 2d 1030, 553 U.S. 662, 2008 U.S. LEXIS 4704 (2008)
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Rule of Law:
Under the False Claims Act, a plaintiff asserting a claim based on a defendant's use of a 'false record or statement' (§ 3729(a)(2)) or conspiracy (§ 3729(a)(3)) must prove that the defendant specifically intended for the false statement to be material in causing the U.S. Government itself to pay a false claim. It is insufficient to merely show that a false statement was made to a private entity that was subsequently paid with government funds.
Facts:
- The U.S. Navy contracted with two shipyards, Bath Iron Works and Ingalls Shipbuilding, to build a fleet of new destroyers.
- The shipyards subcontracted with Allison Engine Company, Inc. to build generator sets (Gen-Sets) for the ships.
- Allison Engine further subcontracted assembly work to General Tool Company (GTC), which in turn subcontracted manufacturing work to Southern Ohio Fabricators, Inc. (SOFCO).
- All contracts and subcontracts required that the work conform to the Navy's baseline drawings and military standards.
- Allison Engine, GTC, and SOFCO allegedly performed work that did not meet contract specifications, such as using defective gearboxes and unqualified welders.
- The subcontractors issued certificates of conformance (COCs) to the shipyards, falsely certifying that their work met all Navy requirements.
- The subcontractors submitted invoices for their non-compliant work to the prime contractors (the shipyards) and were paid.
- All funds used by the shipyards to pay the subcontractors ultimately originated from the U.S. Treasury through the Navy's payments to the shipyards.
Procedural Posture:
- Roger L. Sanders and Roger L. Thacker, as qui tam relators, sued petitioners Allison Engine, GTC, and SOFCO in the U.S. District Court for the Southern District of Ohio under the False Claims Act.
- At the conclusion of the relators' case at trial, the petitioners moved for judgment as a matter of law, arguing the relators failed to produce evidence that a false claim was ever presented to the Navy.
- The District Court granted the petitioners' motion, holding that the FCA required proof that false claims were presented to the Government.
- The relators (appellants) appealed to the U.S. Court of Appeals for the Sixth Circuit.
- A divided panel of the Sixth Circuit reversed the District Court's judgment on the §§ 3729(a)(2) and (a)(3) claims, holding that these sections do not require proof of an intent to cause a false claim to be paid directly by the Government.
- The petitioners (Allison Engine, et al.) sought and were granted a writ of certiorari by the U.S. Supreme Court.
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Issue:
Does the False Claims Act, under 31 U.S.C. §§ 3729(a)(2) and (a)(3), require a plaintiff to prove that the defendant made a false statement with the specific intent for that statement to be material to the U.S. Government's decision to pay a false claim, rather than merely intending to get a false claim paid by a private entity using government funds?
Opinions:
Majority - Justice Alito
Yes. A plaintiff must prove the defendant acted with the purpose of getting a false claim paid or approved by the U.S. Government itself. The court's reasoning rests on a textual analysis of the False Claims Act (FCA). For a § 3729(a)(2) claim, the statutory phrase 'to get' a claim 'paid or approved by the Government' denotes a specific purpose. This requires that the defendant intended for its false statement to influence the Government's payment decision, not just the payment decision of a private intermediary. Getting a claim paid 'by the Government' is distinct from getting it paid using 'government funds.' Similarly, for a § 3729(a)(3) conspiracy claim, the statute requires a conspiracy 'to defraud the Government,' which, consistent with precedent like Tanner v. United States, means the conspirators must agree to defraud the Government itself, not merely a recipient of federal funds. The Court distinguished this intent requirement from the 'presentment' requirement in § 3729(a)(1), noting that a subcontractor need not submit the false statement directly to the Government, but must intend for the prime contractor to use it to get the Government to pay.
Analysis:
This decision significantly clarifies and narrows the scope of liability for subcontractors under the False Claims Act. By requiring proof of specific intent to cause payment by the Government, the Court prevented the FCA from becoming an all-purpose anti-fraud statute applicable to any transaction tangentially involving federal funds. The ruling increases the evidentiary burden for qui tam relators, who must now demonstrate a direct link of intent between a subcontractor's false statement and the Government's ultimate payment decision. This holding protects downstream contractors from FCA liability for frauds that are too attenuated from the government's own decision-making process, ensuring the statute remains focused on fraud directed at the Government.
