Section 3729(a)(2) of the False Claims Act creates civil liability against a defendant who “knowingly makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid by the government.” In 2008, the United States Supreme Court in Allison Engine Co. v. U.S. ex rel. Sanders, 128 S.Ct. 2123 (2008) addressed the intent requirement under the False Claims Act (“FCA”), as well as the FCA’s requirement that a payment be made “by the government” in order to establish liability. In Allison Engine, government contractors allegedly sought fraudulent payments not directly from the United States, but instead from private shipyards which had contracted with the government. The contractors contracted with the shipyards to build equipment (Gen-Sets), which the shipyards incorporated in the construction of Navy destroyers.

The whistleblowers in Allison Engine alleged that the invoices submitted by the contractors to the shipyard fraudulently sought payment for work that had not been completed according to Navy specifications. The district court entered judgment for the defendants and the whistelbowers appealed. The Court of Appeals in Allison Engine held that claims under section 3729(a)(2) do not require proof of intent to cause a false claim be paid by the government. Instead, all that was required was that the plaintiff establish an intent to cause a false claim be paid by a private entity (the shipyard), so long as the private entity was using government funds. Id. at 2127 – 2128.

During the district court trial, the whistleblowers introduced evidence that the defendant subcontractors presented invoices for payment to the shipyards based on certificates of conformance certifying that the work was performed according to the Navy’s requirements. Significantly, the plaintiffs did not introduce evidence showing the invoices were submitted by the shipyards to the Navy. This lack of evidence proved fatal to the whistleblower’s claims because there was no evidence that a false or fraudulent claim was ever presented to the government. Id. at 2127.

The Supreme Court in Allison Engine explains the intent requirement under the False Claims Act. According to the Court, section 3729(a)(2) demands that the defendant make a false record or statement for the purpose of getting a false or fraudulent claim paid by the government. A subcontractor, therefore, violates the False Claims Act when it submits a false statement to the prime contractor, intending for the false statement to be used by the prime contractor to get the government to pay its claim. As the Court explains in Allison Engine, it is not enough that a fraudulent claim was paid using government funds. Instead, the “defendant must intend that the government itself pay the claim.” Id. at 2128.

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Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at jcornell@clarkfountain.com.