Sixth Circuit: FERA False Claims Act Amendment Applies Retroactively To Cases Pending As Of June 7, 2008

On November 2, 2012, the Sixth Circuit held that a 2009 amendment Congress made to the liability provisions of the False Claims Act ("FCA") applies retroactively to civil FCA cases pending as of June 7, 2008. U.S. ex rel. Sanders v. Allison Engine Co., Nos. 10-3818/10-3821, at *17-20 (6th Cir. Nov. 2, 2012).

Background of the Allison Engine Case

In 1995, whistleblowers filed an action under the qui tam provisions of the FCA against various subcontractors alleging that they submitted claims for payment to the Government relating to the construction of generator sets used in Navy Arleigh-Burke-class Guided Missile Destroyers despite knowing that the sets failed to conform to contract specifications and Navy regulations. The district court dismissed the claim on the ground that relators failed to satisfy the presentment element under the FCA, i.e., relators failed to show that defendants presented a false claim to the Government. Sanders v. Allison Engine Co., No. 1:95-cv-970, 2005 U.S. Dist. LEXIS 5612, at *32 (S.D. Ohio Mar. 11, 2005).

On appeal, the Sixth Circuit reversed the decision, holding that presentment was not required for a violation of the FCA. U.S. ex rel. Sanders v. Allison Engine Co., 471 F.3d 610, 622-23 (6th Cir. 2006). The U.S. Supreme Court, however, reversed the Sixth Circuit and remanded the case to the district court, holding that contrary to the Sixth Circuit's holding, the FCA requires the plaintiff to prove that the defendant intended that the false record or statement be material to the Government's decision to pay or approve a false claim. Allison Engine Co. v. U.S. ex rel. Sanders, 553 U.S. 662, 665 (2008).

The FERA FCA Amendments

In response to the Supreme Court's decision, Congress amended the FCA as part of the 2009 Fraud Enforcement and Recovery Act ("FERA") to expand FCA liability to anyone who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim" ("FCA Liability Amendment"). As such, the amendment removed the requirement that a false claim be actually presented to the Government for FCA liability to attach – the element that the trial court found unsatisfied in Allison Engine. The FERA also contained a retroactivity clause providing that the FCA Liability Amendment "shall take effect as if enacted on June 7, 2008, and apply to all claims under the False Claims Act . . . that are pending on or after that date" ("FERA Retroactivity Clause")...