553 U.S. 662 (2008), 07-214, Allison Engine Co., Inc. v. United States ex rel. Sanders

Docket Nº:07-214.
Citation:553 U.S. 662, 128 S.Ct. 2123
Opinion Judge:ALITO, JUSTICE.
Party Name:ALLISON ENGINE CO., INC., et al., Petitioners, v. UNITED STATES ex rel. Roger L. SANDERS and Roger L. Thacker.
Attorney:Theodore B. Olson argued the cause for petitioners. With him on the briefs were Matthew D. McGill, Amir C. Tayrani, Glenn V. Whitaker, Victor A. Walton, Jr., Michael J. Bronson, Lawrence R. Elleman, William A. Posey, W. Jeffrey Sefton, James J. Gallagher, and David P. Kamp. James B. Helmer, Jr., ...
Case Date:June 09, 2008
Court:United States Supreme Court
 
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Page 662

553 U.S. 662 (2008)

128 S.Ct. 2123

ALLISON ENGINE CO., INC., et al., Petitioners,

v.

UNITED STATES ex rel. Roger L. SANDERS and Roger L. Thacker.

No. 07-214.

United States Supreme Court

June 9, 2008

Argued February 26, 2008.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

[128 S.Ct. 2124] Syllabus [*]

The Navy contracted with two shipyards to build destroyers, each of which needed generator sets (Gen-Sets) for electrical power. The shipyards subcontracted with petitioner Allison Engine Company, Inc. (Allison Engine), to build Gen-Sets, Allison Engine subcontracted with petitioner General Tool Company (GTC) to assemble them, and GTC subcontracted with petitioner Southern Ohio Fabricators, Inc. (SOFCO), to manufacture Gen-Set bases and enclosures. The subcontracts required that each Gen-Set be accompanied by a certificate of conformance (COC) certifying that the unit was manufactured according to Navy specifications. All of the funds paid under the contracts ultimately came from the U.S. Treasury.

Former GTC employees Sanders and Thacker (hereinafter respondents) brought this qui tarn suit seeking to recover damages from petitioners under the False Claims Act (FCA), which, inter alia, imposes civil liability on any person who knowingly uses a "false . . . statement to get a false or fraudulent claim paid or approved by the Government," 31 U.S.C. §3729(a)(2), or who "conspires to defraud the Government by getting a false or fraudulent claim allowed or paid," §3729(a)(3). At trial, respondents introduced evidence that petitioners had issued COCs falsely stating that their work was completed in compliance with Navy specifications and that they had presented invoices for payment to the shipyards. They did not, however, introduce the invoices the shipyards submitted to the Navy. The District Court granted petitioners judgment as a matter of law, concluding that, absent proof that false claims were presented to the Government, respondents' evidence was legally insufficient under the FCA. The Sixth Circuit reversed in relevant part, holding, among other things, that respondents' §§3729(a)(2) and (3) claims did not require proof of an intent to cause a false claim to be paid by the Government; proof of an intent to cause such a claim to be paid by a private entity using Government funds was sufficient.

Held:

[128 S.Ct. 2125] 1. It is insufficient for a plaintiff asserting a §3729(a)(2) claim to show merely that the false statement's use resulted in payment or approval of the claim or that Government money was used to pay the false or

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fraudulent claim. Instead, such a plaintiff must prove that the defendant intended that the false statement be material to the Government's decision to pay or approve the false claim. Pp. 668-672.

(a) The Sixth Circuit's interpretation of §3729(a)(2) impermissibly deviates from the statute's language, which requires the defendant to make a false statement "to get" a false or fraudulent claim "paid or approved by the Government." Because "to get" denotes purpose, a person must have the purpose of getting a false or fraudulent claim "paid or approved by the Government" in order to be liable. Moreover, getting such a claim "paid ... by the Government" is not the same as getting it paid using "government funds." Under §3729(a)(2), a defendant must intend for the Government itself to pay the claim. Eliminating this element of intent would expand the FCA well beyond its intended role of combating "fraud against the Government." Rainwater v. United States, 356 U.S. 590, 592, 78 S.Ct. 946, 2 L.Ed.2d 996. PP. 668-669.

(b) The Government's contention that "paid ... by the Government" does not mean literal Government payment is unpersuasive. The assertion that it is customary to say that the Government pays a bill when a recipient of Government funds uses those funds to pay involves a colloquial usage of the phrase "paid by" that is not customarily employed in statutory drafting, where precision is important and expected. Section 3729(c)'s definition of "claim" does not support the Government's argument. The definition allows a request to be a "claim" even if it is not made directly to the Government, but, under §3729(a)(2), it is necessary that the defendant intend that a claim be "paid by the Government," not by another entity. Pp. 669-670.

(c) This does not mean, however, that §3729(a)(2) requires proof that a defendant's false statement was submitted to the Government. Because the section requires only that the defendant make the false statement for the purpose of getting "a false or fraudulent claim paid or approved by the Government," a subcontractor violates §3729(a)(2) if it submits a false statement to the prime contractor intending that contractor to use the statement to get the Government to pay its claim. However, if a subcontractor makes a false statement to a private entity but does not intend for the Government to rely on the statement as a condition of payment, the direct link between the statement and the Government's decision to pay or approve a false claim is too attenuated to establish liability. The Court's reading gives effect to Congress' efforts to protect the Government from loss due to fraud but also ensures that "a defendant is not answerable for anything beyond the natural, ordinary, and reasonable consequences of his conduct." Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 470, 126 S.Ct. 1991, 164 L.Ed.2d 720. Pp. 671-672.

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2. Similarly, it is not enough under § 3729(a)(3) for a plaintiff to show that the alleged conspirators agreed upon a fraud scheme that had the effect of causing a private entity to make payments using money obtained from the Government. Instead, it must be shown that they intended "to defraud the Government." Where their alleged conduct involved the making of a false statement, it need not be shown that they intended the statement to be presented directly to the Government, but it must be established that they agreed that the statement would have a material effect on the Government's decision to pay [128 S.Ct. 2126] the false or fraudulent claim. Pp. 672-673.

471 F.3d 610, vacated and remanded.

Theodore B. Olson argued the cause for petitioners. With him on the briefs were Matthew D. McGill, Amir C. Tayrani, Glenn V. Whitaker, Victor A. Walton, Jr., Michael J. Bronson, Lawrence R. Elleman, William A. Posey, W. Jeffrey Sefton, James J. Gallagher, and David P. Kamp.

James B. Helmer, Jr., argued the cause for respondents. With him on the brief were Paul B. Martins and Robert M. Rice.

Malcolm L. Stewart argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were former Solicitor General Clement, Acting Assistant Attorney General Bucholtz, Deputy Solicitor General Kneedler, Douglas N. Letter, and Thomas M. Bondy.[*]

OPINION

ALITO, JUSTICE.

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The False Claims Act (FCA) imposes civil liability on any person who knowingly uses a "false record or statement to get a false or fraudulent claim paid or approved by the Government," 31 U.S.C. §3729(a)(2), and any person who "conspires to defraud the Government by getting a false or fraudulent claim allowed or paid," §3729(a)(3). We granted review in this case to decide what a plaintiff asserting a claim under these provisions must show regarding the relationship between the making of a "false record or statement" and the payment or approval of "a false or fraudulent claim ... by the Government."

Contrary to the decision of the Court of Appeals below, we hold that it is insufficient for a plaintiff asserting a §3729(a)(2) claim to show merely that "[t]he false statement's use . . . result[ed] in obtaining or getting payment or approval of the claim," 471 F.3d 610, 621 (CA6 2006) or that "government money was used to pay the false or fraudulent claim," id., at 622. Instead, a plaintiff asserting a §3729(a)(2) claim must 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. Similarly, a plaintiff asserting a claim under §3729(a)(3) must show that the conspirators agreed to make use of the false record or statement to achieve this end.

I

In 1985, the United States Navy entered into contracts with two shipbuilders, Bath Iron Works and Ingalls Shipbuilding (together the shipyards), to build a new fleet of Arleigh Burke class guided missile destroyers. Each destroyer required three generator sets (Gen-Sets) to supply all of the electrical power for the ship. The shipyards subcontracted with petitioner Allison Engine Company, Inc. (Allison Engine), formerly a division of General Motors, to build

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90 Gen-Sets to be used in over 50 destroyers. Allison Engine in turn subcontracted with petitioner General Tool [128 S.Ct. 2127] Company (GTC) to assemble the Gen-Sets, and GTC subcontracted with petitioner Southern Ohio Fabricators, Inc. (SOFCO), to manufacture bases and enclosures for the Gen-Sets. The Navy paid the shipyards an aggregate total of $1 billion for each new destroyer. Of that, Allison Engine was paid approximately $3 million per Gen-Set; GTC was paid approximately $800,000 per Gen-Set; and SOFCO was paid over $100,000 per Gen-Set. All of the funds used to pay petitioners ultimately came from the Federal Treasury.

The Navy's contract with the shipyards specified that every part of each destroyer be built in accordance with the Navy's baseline drawings and military standards. These requirements were incorporated into each of petitioners' subcontracts. In addition, the contracts required that each delivered Gen-Set be accompanied by a certificate of conformance (COC) certifying that the unit was manufactured in accordance with the Navy's requirements.

In 1995, Roger L. Sanders and Roger L. Thacker (hereinafter...

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