Those of us who write about litigation have a slim thesaurus.
There's a lot of overlap, especially when you don't want to
sound like a geeky nitpicker, between "suit," "complaint,"
"case" and "claim." But a ruling Friday by the 6th Circuit Court of Appeals shows, once again, that the law belongs to geeky
nitpickers. A three-judge panel of the 6th Circuit ultimately
decided what when Congress amended the False Claims Act in 2009,
it didn't mean to draw a line distinguishing between "claims"
If you're thinking that should have been an obvious
conclusion, you'd be wrong. Other federal circuits have reached
the opposite conclusion about "cases" and "claims" in the FCA
amendment, and it took the 6th Circuit pages of analysis of the
statutory language and background to justify its holding.
Ironically, the 6th Circuit's ruling came in the very same
whistle-blower case that resulted in the U.S. Supreme Court
ruling that prompted Congress to amend the False Claims Act in
2009: an FCA suit by whistle-blower Roger Sanders against
Allison Engine Company which has been climbing up and down the
federal court system for 17 years. Whistle-blower counsel James
Helmer of Helmer, Martins, Rice & Popham told me Monday that
he's hoping he'll finally get a trial date, but he's not holding
his breath: Given the circuit split on interpreting
congressional intent on "claims" and "cases," there's every
possibility that Allison Engine will seek additional appellate
review. (Allison counsel Glenn Whitaker of Vorys, Sater, Seymour
& Pease referred me to an Allison representative, who said in a
statement that the company is reviewing the ruling and
evaluating its options.)
Here's the once-in-a-lifetime backstory. Sanders and another
whistle-blower filed a quitam suit in 1995, claiming that
several defense subcontractors engaged in fraud in connection
with the construction of generators for U.S. Navy missile
destroyers. The United States intervened to prosecute the
whistle-blowers' claims. After a jury trial, U.S. District Judge
Thomas Rose of Cincinnati tossed the case, ruling that, as a
matter of law, the plaintiffs hadn't shown that false claims
were actually presented to the Navy. In the case's first trip to
the 6th Circuit, the appeals court disagreed, holding that
there's no presentment requirement for liability under the False
Claims Act. But the whistle-blowers' roller coaster took a
plunge when the Supreme Court ruled in 2008 that plaintiffs have to show that the defendant made a false statement in connection
with a claim for payment by the United States.
Fearing that the ruling would make it tougher to police
fraud against the federal government, Congress enacted
legislation in 2009 to revise the standard of liability under
the False Claims Act. Specifically, the new law imposed
liability for "knowingly (making) ... a false record or
statement material to a false or fraudulent claim," thus
eliminating the Supreme Court's requirement that plaintiffs show
defendants actually made the fraudulent claim.
That provision was straightforward enough for cases stemming
from conduct after the law took effect in May 2009. But what
about cases dating back before the new law -- like the Allison
Engine suit that spawned the FCA amendment? Here's where the
contradiction between "claims" and "cases" comes in. In two
separate provisions of the 2009 law, Congress said that the
amended liability would apply to all FCA "claims" pending as of
June 2008. But it also said it would apply to "cases" pending as
of the date of the new law's enactment.
When the Allison case returned to Judge Rose in federal
district court in Cincinnati, he ruled that there were no
pending FCA claims in the case as of June 2008, so the case
couldn't be revived. Rose said that if Congress had meant
retroactively to apply the new liability standard to all cases,
it wouldn't have used the word "claims" in the provision
relating to that standard. The trial judge also said that even
if the new standard applied, retroactive liability was
unconstitutional under the ex post facto clause, which bars
retroactive punishment for conduct that predates the law
The 6th Circuit accepted an interlocutory appeal on the
"claim" versus "case" question, which it framed this way: " I f
'claim' in (the amended FCA law) means a request or demand for
payment, then (the provision) would not apply retroactively to
this case because there were no claims pending in 2008....
However, if 'claim' means a civil action or case, then (the law)
would apply because this case was pending in June 2008."
According to the 6th Circuit, in rather cursory examinations of
the question, the 2nd and 7th Circuits have found that
retroactive liability attaches to all FCA cases dating back to
2008, but the 9th and 11th Circuits have said that "claim" means
a demand for payment, so only cases involving actual demands can
be revived under the new standard.
In its painstaking examination of the question, the 6th
Circuit panel -- Chief Judge Alice Batchelder and Judges Julia
Gibbons and Deborah Cook -- said that the provisions referring
to "claims" and "cases" were drafted by different bodies of
Congress at different times, and since the statute elsewhere
uses "claim" and "case" interchangeably, it would be a mistake
to impose a distinction where Congress does not appear to have
And in what may turn out to be a further-reaching
examination, the panel also concluded that the False Claims Act
is not punitive, so the ex post facto doctrine does not apply.
Though the legislative history is replete with mentions of
punishment, the court acknowledged, this is a civil statute, so
in the end "Congress intended to implement civil proceedings for
combating fraud and not to impose punishment."
Whistle-blower counsel Helmer said that the appeals court
ruling means that even if the original plaintiff dies before the
case concludes, his estate can continue litigating. "We've now
won this case twice at the 6th Circuit, once at the Supreme
Court, and before Congress," he said. "We're hoping now we can
get a trial date and finish it."
(Reporting by Alison Frankel)
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