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Supreme Court Rules on Allisoin Engine Case

On June 9, 2008, the Supreme Court Ruled in the case of Allison Engine Co., Inc. v. U.S. ex rel. Sanders, 76 U.S.L.W. 4387, 2008 U.S. Lexis 4704 (June 9, 2008).  The Court was completely correct on the real issue at hand–“The inclusion of an express presentment requirement in subsection (a)(1), combined with the absence of anything similar in subsection (a)(2), suggests that Congress did not intend to include a presentment requirement in subsection (a)(2).”

Id. slip op. at 16.  However, the Court veered far of course on its focus in the unanimous opinion with the weaknesses highlighted in the footnotes.

Footnote 1 concerns the Court’s insistence in protecting private entities in light of its ruling that no presentment to the government is required under (a)(2), which goes so far afield that it is irreconcilable with the clear language in section 3729(c).  Congress was clear in subsection (c) that it intended a much broader reading, but the Supreme Court has effectively read (c) out of the statute.

Footnote 2 similarly runs roughshod over subsection (b) where Congress expressly stated that no specific intent to defraud is required.  The Supreme Court has pulled out of the statute the language “to get a claim paid” and read that as requiring specific intent.  Thus, both attempts to reconcile the ruling with the plain language of the FCA fall woefully short.

In addition, the Supreme Court has grafted onto the statute requirements that Congress specifically tried to clarify were not intended to be there when it amended the FCA in 1986.  The concepts of specific intent, materiality and limits on direct payments from the government were part of the target of the amendments attempt at cleaning up overly restrictive pre-1986 court decisions.  In the legislative history of the 1986 amendments, Congress told the Courts it expected the FCA to be interpreted very broadly as directed in the case of U.S. v. Neifert-White Co., 390 U.S. 228, 232 (1968), but in Allison Engine, Congress got the anti-Neifert-White.  Hopefully, Congress will correct the more damaging and narrowing comments of the Court in the upcoming “FCA Corrections Act of 2008″.