The United States Supreme Court has granted cert in the case of Allison Engine Company, Inc. et. al. v. United States ex rel Roger Sanders, Supreme Court Docket No. 07-214.
Defendants, including the General Motors Corporation, and its former division Allison Engine Company, are challenging the government’s ability to recover damages in a suit involving government contractor fraud. At issue is a loophole in the False Claims Act that was first articulated by Chief Justice John Roberts when he was an appellate court judge. Known as the “Totten” rule or the “presentment requirement,” it could allow contractors to escape civil liability for their fraudulent actions if they were not the party who formally presented their claim to the government for payment.
The Sixth Circuit held the subcontractors liable in this case for supplying defective parts meant for use in Navy destroyers. The subcontractors claims they are not liable under the False Claims Act because they billed the shipyards, not the Navy, for the parts.