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: Virginia Qui Tam Law

Breaking News: U.S. Supreme Court announces its decision in Allison Engine case

By Zachary A. Kitts

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    The Supreme Court today announced its opinion in Allison Engine Co., Inc., et al. v. United States ex rel Sanders, et al. Case No. 07-214. To read the opinion, click here.

    As a recap, Allison Engine is important because it resolves a Circuit split on the issue of presentment--i.e., whether a false claim that otherwise qualifies as a violation of the False Claims Act must be presented to an actual officer or employee of the federal government in order to create liability under 31 U.S.C. 3729(a)(2).

    Previously, the D.C. Circuit had held, in U.S. ex rel Totten v. Bombardier Transportation Corp., 380 F3d 488 (D.C. Cir. 2004) that the FCA contains a presentment requirement. As a result, a false claim made to Amtrak (for not delivering contracted for materials for Amtrak trains) was not the same thing as submitting a false claim to the federal government.

    Allison Engine, until today, stood at the opposite end of the spectrum. In the Sixth Circuit's view, liability arose without presentment to a government official, so long as the government (or relator) can show that government funds ultimately paid the claim.
See, Allison Engine, 471 F.3d 610 (6th Cir. 2006).

    The question is of paramount importance because of the prevalence of sub-contracting relationships. In the eyes of some, sub-contractors--and their prime contractor clients--may well get away with murder, because they will be essentially immune from suit. Personally, I doubt this outcome--which is the worst-case scenario--will materialize, although I do think we can pretty much count on claims under 31 U.S.C. 3729(a)(2) and (a)(3) becoming much harder to prove.

    It is always hazardous, however, to analyze Supreme Court decisions on the fly, and so I will leave it at that for today. Suffice to say here that there is often a silver lining to such holdings. Many qui tam commentators were fearful after the Court's decision in Rockwell last year; it is fair to say, however, that on the whole there have been some upsides to the Supreme Court's ruling in Rockwell.

    Hopefully we can count on this opinion to reinvigorate the push to get the False Claims Correction Act through the full Senate.

Zachary Kitts
Cook & Kitts, PLLC

Full post as published by Virginia Qui Tam Law on June 09, 2008 (boomark / email).