The Sixth Circuit Court of Appeals recently upheld Congress’ 2009 Amendment of the False Claims Act. Congress, enacting the Fraud Enforcement and Recovery Act (FERA), lowered the standard of liability under the False Claims Act. The previous standard imposed liability for “knowingly making a false record or statement to get a false or fraudulent claim paid or approved by the government.” The new, significantly broader standard imposes liability for “knowingly making a false record or statement material to a false or fraudulent claim.” The broader standard is now the standard of liability in the Sixth Circuit, and is retroactive to cases filed prior to FERA.
The decision came in the case “Sanders v. Allison Engine” originally filed in 1995 (the year your correspondent was admitted to practice law). The false claims involved were submitted by sub-contractors to Allison Engine during the 1980s and 1990s. Thus, some of the false claims were made 30 years ago and still have not been repaid. This decision, though favorable to the Relators, still does not mean they will be paid anytime soon. The Sixth Circuit remanded the case to the trial court in the Southern District of Ohio, which must now decide how to ultimately resolve the matter. The two takeaway points from this decision are that: 1) Congress broadened the standard for False Claims reported by Whistleblowers when it amended the False Claims Act, and 2) a Whistleblower’s case can take many years to achieve resolution. I hope that the law becomes more settled, including this opinion, and inspires fraudsters to pay up on their wrongdoing more quickly, rather than battling for decades about technical legal issues.
