Allison Engine Co., Inc. v. United States ex rel. Sanders

PETITIONER:Allison Engine Co., Inc., et al.
RESPONDENT:United States ex rel. Roger L. Sanders and Roger L. Thacker
LOCATION:Earthquake Park

DOCKET NO.: 07-214
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 553 US 662 (2008)
ARGUED: Feb 26, 2008
DECIDED: Jun 09, 2008

James B. Helmer, Jr. – on behalf of the Respondents
Malcolm L. Stewart – on behalf of the United States, as amicus curiae, supporting the Respondents
Theodore B. Olson – on behalf of the Petitioners

Facts of the case

Two workers involved in the manufacture of electrical supplies for the Navy’s billion-dollar guided missile destroyers brought a whistleblower case alleging that subcontractors performed faulty work. The two charged that the companies employed unqualified workers, installed leaky gearboxes and used defective temperature gauges. After a five-week trial, the district court granted judgment as a matter of law for the companies, concluding that the False Claims Act under which the suits were brought requires that defendants “present” the fraudulent claims to the government. Because the subcontractors actually invoiced the general contractor and not the government, the court ruled that the presentment requirement had not been met. The appeals court reversed, holding that the Act should be liberally construed to discourage private companies from defrauding the government.


Must whistleblower claimants prove that a private company directly presented a fraudulent bill to the government in order to prevail in a False Claims Act case?

Media for Allison Engine Co., Inc. v. United States ex rel. Sanders

Audio Transcription for Oral Argument – February 26, 2008 in Allison Engine Co., Inc. v. United States ex rel. Sanders

Audio Transcription for Opinion Announcement – June 09, 2008 in Allison Engine Co., Inc. v. United States ex rel. Sanders

Samuel A. Alito, Jr.:

This case comes to us on writ of certiorari to the Sixth Circuit.

The Navy contracted with two shipyards to build destroyers that needed generator sets for electrical power.

The shipyards, in turn, contracted with petitioner, Allison Engine to build the generator sets.

Allison Engine subcontracted with petitioner General Tool Company to assemble the generator sets and General Tool subcontracted with petitioner Southern Ohio Fabricators to manufacture the generator sets.

The subcontracts required that each generator set be accompanied by a certificate of conformance, certifying that the unit was manufactured according to Navy specifications.

Former General Tool Company employees filed the qui tam action that is now before us asserting claims under two provisions of the False Claims Act.

31 U.S.C. Section 3729(a)(2), which imposes to the liability on any person who knowingly uses a false statement to get a false or fraudulent claim paid or proved by the Government.

And 31 U.S.C. Section 3729(a)(3), which reaches conspiracies to defraud the Government by getting a false or fraudulent claim allowed or paid.

At trial, respondents failed to introduce evidence that petitioners had submitted a false claim to the Navy.

The District Court granted petitioners judgment as a matter of law concluding that without such proof, respondent’s evidence was legally insufficient.

The Sixth Circuit reversed in relevant part holding that respondent’s claims did not require proof of an intent to cause a false claim to be paid by the Government.

Rather, that Court held that it was enough to show that petitioners intended to cause such a claim to be paid by private entity using government funds.

We disagree with that analysis.

We hold that it is insufficient for a plaintiff asserting a Section 3729(a)(2) claim, to show merely that the false statements used resulted in the payment or approval of the claim or that government money was used to pay the false or fraudulent claim.

Instead, such a plaintiff must prove that the defendant intended that the false statement be material to the Government’s decision to pay or approve the false claim.

This does not mean that Section 3729(a)(2) requires proof that a defendant’s false statement was in fact submitted to the Government.

Instead, a subcontractor violates section 3729(a)(2), if it submits a false statement to the prime contractor, intending that contractor to use the statement to get the Government to pay its claim.

Similarly, it is not enough under Section 3729(a)(3) for a plaintiff to show that the alleged conspirators agreed upon a fraud scheme that had the effect of causing a private entity to make payments, using money obtained from the Government.

Instead, it must be shown that they intended to defraud the Government.

Because the decision of the Court of Appeals was based on an incorrect interpretation of Sections 3729(a)(2) and (3), we vacate the judgment and remand the case for further proceedings consistent with this opinion.

The judgment of the Court is unanimous.