Why the False Claims Act Should be Read Broadly: Supreme Court Nominee Merrick Garland's Dissent in U.S. ex rel. Totten v. Bombardier Corp.

In U.S. ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004), Merrick Garland, president Obama's Supreme Court nominee, delivered a powerful dissent arguing that 31 U.S.C. 3729(a)(2) (now Section (a)(1)(B)) of the False Claims Act does not require a person to present a false claim directly to the Government; rather, liability should attach if a person made a false claim in order to get paid by the Government, whether the claim was presented to the Government or not (this construction of Section 3729(a)(2) was validated four years later by a unanimous Supreme Court in Allison Engine Co., Inc. v. U.S. ex rel. Sanders). 

Particularly noteworthy as one of only 16 dissents Judge Garland wrote during his 19 years on the D.C. Circuit, his meticulous and exhaustive analysis of the statutory language and legislative history of the FCA reveals his understanding of the FCA as a comprehensive anti-fraud statute—and his unwillingness to narrow its reach.  

U.S. ex rel. Totten v. Bombardier Corp. False Claims Act Case

 In Totten, the relator alleged that Bombardier Corporation and Envirovac, Inc. delivered allegedly defective rail cars to Amtrak, which Amtrak paid for in part with funds it received from the Government.  The relator alleged that the defendants violated Section 3729(a)(1) (now Section 3729(a)(1)(A)) of the False Claims Act, which imposes liability on any person who  "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval."

A Question of Government Entity and Presentment Under the False Claims Act

The issue, however, was whether the defendants could be held liable under Section 3729(a)(1)  for presenting claims to Amtrak that were partly paid for with Government funds, but not presented directly to the Government.  The D.C. Circuit, in an opinion written by now-Chief Justice John Roberts, held that "Amtrak is not the Government . . . under the plain language of Section 3729(a)(1), claims must be presented to an officer or employee of the Government before liability can attach."  The court thus granted the defendants' motion to dismiss.

Though not initially invoked by the parties, Judge Garland raised the issue of whether the defendants could nonetheless be held liable under Section 3729(a)(2) (now Section 3729(a)(1)(B)) of the statute in his dissenting opinion.  Section 3729(a)(2), unlike (a)(1), has no explicit "presentment" requirement; rather, it imposed liability on any person who "knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government." 

Because Judge Garland raised the issue, the majority also examined Section 3729(a)(2) and held that presentment of a claim directly to the government was still required: "Making false records or statements to get a false claim paid or approved by Amtrak is not making or using a false record or statement to get a false or fraudulent claim paid or approved by the Government."

Judge Garland argued that the majority's interpretation that Section 3729(a)(2) required presentment was not only inconsistent with the plain text of the statute, it was also irreconcilable with the legislative history of the Act.  

An Argument for a Broad Approach to the False Claims Act

Tellingly, Judge Garland focused on the purpose of the FCA as "the Government's primary litigative tool for combating fraud" at the beginning of the dissent.  Judge Garland then explained that the majority interpretation of Section 3729(a)(2):

 . . . leaves vast sums of federal monies without False Claims Act protection. Under the court's interpretation, the government cannot recover against a contractor that obtains money by presenting a false claim to a federal grantee—even if every penny paid to the contractor comes out of an account comprised wholly of federal funds—unless the grantee "re-presents" that false claim to a federal employee.

 Judge Garland then turned to the plain language of the text, which, as he points out the majority conceded, "contains no express requirement of presentment . . ." He went on to explain that reading such a requirement into the statute would greatly restrict the reach of the FCA:

The implications of the court's argument are breathtaking, because they do more than just impose a requirement of re-presentment. If payment "by the government" means that the government itself must write the check, then fraud on grantees who pay their own contractors is not covered by the False Claims Act regardless of whether claims are re-presented to a government employee. The statutory language requires no such result.

After a discussion of statutory construction and the legislative history of the FCA, Judge Garland took issue with the majority's concern that "the potential reach of the Act is almost boundless" without a presentment requirement, explaining that "far from worrying that the False Claims Act might extend too far in covering fraud on grantees, Congress insisted that a false claim to the recipient of a grant from the United States or to a State under a program financed in part by the United States is a false claim to the United States."

The False Claims Act – A Comprehensive Anti-Fraud Statute

He went on to reiterate that "[t]he consequence of today's ruling is a dramatic cutback in the federal government's ability to protect itself against false claims on federal grant money." To close out the dissent, Judge Garland once again demonstrated his understanding that the FCA should have a broad reach:

The United States charges that the interpretation the court adopts today will "significantly restrict[ ] the reach of the False Claims Act in a manner than [sic] Congress did not intend, withdrawing False Claims Act protection with respect to a broad swatch of false claims injury on the federal fisc." The United States is right. If that interpretation were required by the statutory language, we would of course be required to adopt it nonetheless. But the court's interpretation is neither compelled by nor consistent with the language of 31 U.S.C. 3729(a)(1) and (c). I therefore respectfully dissent.

Judge Garland's dissent in Totten thus makes clear that he thinks of the FCA as a comprehensive anti-fraud statute, the reach of which should not be narrowed without explicit direction from the text of the Act.

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