Qui Tam

Supreme Court requires Whistleblowers to show there was intent to defraud the government

By Brian F. LaBovick

In a recent Supreme Court decision today, in the qui tam suit, Allison Engine Co. v. US ex. Rel Saunders,  Supreme Court Justice Alito writes in his opinion that  "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 the false or fraudulent claim. Pp 8 -10." 471 F. 3d 610, was vacated and remanded. This was a unanimous decision for the Court.

According to Stephen M. Kohn, the President of the National Whistleblower Center,  the Court laid the responsibility for fixing the law directly on Congress: 'Had congress intended' the False Claims Act to 'apply to any one who conspired to defraud' the government 'it would have so provided."

Does this give conspirators planning to defraud the government, a  " free pass"?  Let's hope this is not the case. Maybe this uncertainty will light a fire under Congress to pass the False Claims Correction Act. 

Note to Whistleblowers: Do not let this ruling discourage you from bringing qui tam cases. This decision is only a minor set back.  The rules of the game may have changed a little, however,  the strategy to bring those guilty of defrauding the government to justice, has become more interesting.

Click here to read entire Supreme Court Opinion for Allison Engine Co. v. US ex. Rel Saunders

Full post as published by Whistleblower Law Blog on June 09, 2008 (boomark / email).