1.15.2007

Sixth Circuit Splits from D.C. Cir. Re "Presentment" Requirement of False Claims Act

BNA has noted in its U.S. Law Week that a recent Sixth Circuit case departs from a 2004 D.C. Circuit opinion regarding whether presentment of a false claim to the government is required in all FCA suits, or only in the subsection where it is explicitly noted. Below is an excerpt from Judge Gibbons' opinion in U.S. ex rel. Sandersv. Allison Engine Co., Inc., --- F.3d ---, 2006 WL 3716362 (6th Cir. Dec. 19, 2006):

. . . [D]efendants moved for judgment as a matter of law on the grounds that the lack of evidence of any false claim presented to the government meant that no reasonable jury could find a violation under the FCA. The district court accepted this argument and granted the motion. Relying on United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C.Cir.2004), cert. denied 544 U.S. 1032 (2005), the court held that liability under the FCA required a showing that a false or fraudulent claim was presented to the government, either by the defendants or by the prime contractor.

. . .

The plain language of the FCA states that actual presentment of a claim to the government is required under one, but not all, of the statute's sections. Only subsection (a)(1) of the statute makes any mention of presenting a claim to the government or Armed Forces. Subsections (a)(2) and (a)(3), which are separate bases for liability, contain no such presentment language. Subsection (a)(2) requires only that a defendant "make[ ]" or "use[ ]" a "false record or statement" in order to induce the government to pay or approve a claim. 31 U.S.C. § 3729(a)(2). Subsection (a)(3) requires a conspiracy to defraud the government to pay or allow a false claim. Id. § 3729(a)(3). The definition of "claim" in part (c) further supports the reading that presentment is not required under all sections of the statute. A claim is "any request or demand ... for money or property which is made to a contractor ... if the United States provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor ... for any portion of the money or property which is requested or demanded." Id. § 3729(c) (emphasis added). The focus of this language is on the money paid out by the government in response to a false statement or fraudulent request for payment. There is nothing in this language to suggest the claim must be shown to have been presented to the government, so long as it can be shown that the claim was paid with government funds.
The legislative history of the FCA . . . provide[s] strong evidence that Congress intended the 1986 amendments to overrule restrictive judicial interpretations of the FCA and increase the reach of the statute. By rewording the statute and adding subsection (c), Congress accomplished this expansion, including making the FCA applicable to cases in which the government sustains a financial loss, regardless of whether the false claim is actually presented to the government. Reading a presentment requirement into subsections (a)(2) and (a)(3) is contrary to this purpose and contradicts the plain language of the statute.

The district court, relying on the D.C. Circuit's decision in Totten, 380 F.3d 488, did just this. . . . Though the presentment language is not present in subsection (a)(2), the majority reasoned that because the two sections were previously part of the same clause, subsection (a)(2) must be read in conjunction with the presentment language in subsection (a)(1). Id. at 499-500. The court read the "by the Government" language in subsection (a)(2), which was added in 1986, as referring back to the presentment language in subsection (a)(1), id. at 499, despite the fact that these clauses are disjunctive and a litigant need only satisfy subsection (a)(1) or (a)(2) to prove an FCA claim. See 31 U.S.C. § 3729(a). The court also read this language as limiting the reach of section (c). . . .

We disagree with the Totten court's interpretation of the FCA for several reasons. One, the plain language of subsections (a)(2) and (a)(3) simply does not require that a claim must be presented to the government to be actionable. Congress could have chosen to include the presentment language of subsection (a)(1) in other parts of the FCA and did not. The Supreme Court has consistently counseled against attributing the same meaning to different language in the same statute. . . . [R]eading presentment into subsection (a)(2) would give it almost the same meaning as subsection (a)(1), rendering the latter largely superfluous.See Totten, 380 F.3d at 507 (Garland, J., dissenting). The "cardinal principle of statutory construction," however, is "to give effect, if possible, to every clause and word of a statute rather than to emasculate an entire section." Bennett v. Spear, 520 U.S. 154, 173 (1997) (internal citations, quotations, and alterations omitted). The FCA cannot be read so as to make the meanings of subsections (a)(1) and (a)(2) indistinguishable.

For the full BNA report on the case, please click here.

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