Unanimous Supreme Court Rejects Expansion of False Claims

A unanimous U.S. Supreme Court, in an opinion written by Justice Samuel Alito, rejected the Sixth Circuit’s recent expansion of False Claims Act (“FCA”) liability into the private sector. See Allison Engine Co. v. United States ex rel. Sanders, No. 07-214 (June 9, 2008). (http://www.supremecourtus. gov/opinions/07pdf/07-214.pdf) Instead of transforming the FCA into an “all purpose fraud statute,” that impacts any transaction involving government money to pay a subcontractor’s false claim, the Court determined that the FCA applies only to fraud on the government, as opposed to fraud on private entities. The Court determined that the Act requires the government, and any private individuals suing on its behalf, to prove that the defendant intended that the false record or statement be material to the government’s decision to pay or approve the false claim.

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