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Allison Engine Co. v. United States

Issues

The False Claims Act has a number of subsections under which contractors may be found liable for defrauding the federal government. Contractors may be found liable under subsection (a)(1) only if someone presented a fraudulent bill to the federal government. Subsections (a)(2) and (a)(3) do not spell out the same  "presentment" requirement in explicit terms. Do these subsections still include a "presentment" requirement that there be proof that a false bill was sent to the government, or is it enough to show that the fraudulent bill was paid with federal funds?  

 

In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government, but rather billed the company directly above them in the chain of production. The company directly above them did not include these bills when submitting for payment from the government. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without evidence that the federal government actually relied on a fraudulent bill. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the fraudulent bill was actually presented to the federal government. The ultimate decision by the Supreme Court could have important economic consequences for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act.

Questions as Framed for the Court by the Parties

Whether a plaintiff asserting a cause of action under Section 3729(a)(2) or Section 3729(a)(3) of the False Claims Act is required to prove that a false claim was submitted to the federal government, or whether it is sufficient to establish that the claim was paid using federal funds.

In 1863, Congress passed the False Claims Act ("FCA") to address problems associated with private contractors who had cheated the federal government throughout the Civil War. United States v. Allison Engine Co., 471 F.3d 610, 614 (6th Cir.

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