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 Supreme
Court Remands Allison Engine Case
to 6th Circuit
The Supreme
Court has ruled unanimously that the False
Claims Act applies to subcontractors and
other indirect recipients of federal funds,
but that the subcontractor must
intend the government to rely on a
fraudulent claim in order to get paid. The
Supreme Court sent the Allison Engine case
back to the 6th U.S. Circuit Court of
Appeals in Cincinnati to apply the standard
it laid out.
What's this decision mean for the False
Claims Act? It's a mixed bag.
On the
upside, the court swept away the notion that
there is a direct presentment requirement
under the False Claims Act.
On the
downside, the court has read into the law an
intent
requirement which seems to say the
fraudfeasor must submit a false claim
with the
intention
of getting the Government
itself
to pay out with
government funds. In addition, fraud
fighters will now need to show that the
false record or statement being made would
have had a
"material
effect"
on the Government's decision to pay the
false or fraudulent claim.
Yesterday's decision is perplexing because
the 1986 False Claims Act amendments
specifically added a provision stating
that "no proof of specific intent to defraud
is required." The Court, however, noted
that Congress used conflicting language in
the liability provisions of the law and
decided that this somehow resurrected an
intent element.
The Court
also added a "materiality element" to the
False Claims Act which, in fact, appears
nowhere in the statutory language.
>>
To read the opinion (PDF) |
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