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Supreme Court rules in FCA case on subcontractor fraud

In a unanimous opinion by Justice Samuel Alioto, the U.S. Supreme Court Court raised the government’s burden of proof in subcontractor fraud suits under the False Claims Act.

In Allison Engine v. U.S. ex rel Sanders, decided on June 9, the court ruled that a plaintiff in a False Claims Act suit “must prove that the defendant intended that the false record or statement be material to the government’s decision to pay or approve the false claim.”

The Federal Times quotes a number of interested observers, some of whom welcome the clarification and others who see a difficulty in cases involving multiple layers of subcontractors, when the subcontractors may not actually present their invoices to the government.

Senator Charles Grassley has said that he intends to amend the Act to fix the problem so that there isn’t a “a free fraud zone for subcontractors.”

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