Government Contracts Monitor

Congress Amending the False Claims Act to Redress the Impact of the Supreme Court\'s Ruling in Allison Engine

February 5, 2009

The Fraud Enforcement and Recovery Act of 2009 (FERA), (for more information), proposes significant changes to federal criminal law, including amending the  False Claims Act (FCA) to clarify that Congress’ “original intent” was to extend the Act to any false or fraudulent claim for government money or property, whether or not the claim is presented to a government official or employee, whether or not the government has physical custody of the money, and whether or not the defendant specifically intended to defraud the government.

This last provision is specifically designed to “redress the impact” of the Supreme Court’s decision last term in U.S. ex rel. Sanders v. Allison Engine, 128 S. Ct. 2123 (2008), in which the Court rejected the government’s interpretation of the False Claims Act as extending FCA liability to almost any subcontractor working on a government contract.  The Court sided with Allison Engine, a subcontractor on a Navy contract, ruling that prosecutors must prove that a subcontractor intends for the Government (not the general contractor) to pay a fraudulent claim for there to be a violation under the FCA.  Thus, Allison Engine made it decidedly more difficult for the government to prosecute subcontractors who submitted fraudulent claims for payment to general contractors paid with government funds.

In light of Allison Engine, FERA would statutorily amend the FCA to cover situations in which the subcontractor knowingly makes a false statement to the general contractor on a government contract – whether or not they intended for it to be paid by the federal government.

 

This article was authored by Samuel W. Jack, Jackson Kelly PLLC