Allison Engine Co. v. United States Ex Rel. Sanders

Background

The Navy hired private shipyards to build destroyers, and those yards hired a chain of subcontractors to supply generator sets. A parts maker, an assembler, and a fabricator issued certificates saying units met Navy rules. Two former assembler employees brought a fraud lawsuit under the federal False Claims Act, saying those certificates and invoices were false. The District Court ruled for the contractors because the plaintiffs did not show a false claim was presented to the Navy; a court of appeals disagreed about what plaintiffs must prove.

Reasoning

The Court addressed whether a defendant must intend that a false statement lead the Government itself to pay or approve a claim. It held that plaintiffs must prove the defendant intended the false statement to be material to the Government’s decision to pay or approve the claim. The Court explained that “to get” means purpose, so liability requires intent that the Government, not merely a private recipient using Government funds, make the payment. The Court also said presentment to the Government is not always required: a subcontractor can be liable if it intended the prime contractor to use the false statement to obtain Government payment. For conspiracy claims, the conspirators must intend to defraud the Government and agree the false statement would affect the Government’s payment decision.

Real world impact

The decision narrows when companies and subcontractors can be sued under the False Claims Act by requiring proof of intent to influence the Government’s payment decision. The Court vacated the appellate ruling and sent the case back for further proceedings under this narrower rule.