News
ATRA Lauds High Court's Unanimous 'False Claims' Decision
From www.ATRA.org, June 09, 2008
In welcoming today’s unanimous Supreme Court decision in an important False Claims Act case, American Tort Reform Association president Tiger Joyce said “it appropriately limits the federal statute’s scope to acts by those who defraud the U.S. Treasury, keeping the law from morphing – as the plaintiffs’ bar and some of their allies in Congress would prefer – into a catch-all for virtually all civil disputes.”
The case, Allison Engine Co. v. United States ex rel. Sanders (No. 07 214), was closely watched as Congress considers amendments to the FCA. It involved fraud allegedly perpetrated on a private contractor by a private subcontractor in work for the government.
The Justices rejected arguments that would have created “a cause of action under the FCA for fraud directed at private entities,” which the Court explained would “threaten to transform the FCA into an all purpose antifraud statute.” Instead, the Court insisted that, under the FCA, there must be a sufficiently “direct link between the false statement and the Government’s decision to pay or approve a false claim” for liability to exist. “Contrary to the wisdom of a unanimous Supreme Court,” Joyce continued, “Congress’s misguided amendments would expand the FCA dramatically and encourage a whole new wave of speculative litigation driven by so-called ‘whistleblowers’ and their overly eager tort lawyers.
“Passage of these amendments could result in an effort to turn virtually any routine commercial dispute into a ‘federal case,’” he added. “So let’s hope lawmakers study today’s high court decision and realize that these amendments are a very bad idea – unless one happens to support an extremely costly and wholly unnecessary expansion of such liability.”
