High Court Sets Limits In Government Fraud Cases

     WASHINGTON (CN) – Former employees of Navy subcontractors failed to establish a direct link between alleged false claims and the government’s decision to pay or approve those claims, the U.S. Supreme Court ruled.

     Two ex-workers for General Tool Co., a subcontractor hired to help make generator sets needed to build Navy destroyers, filed a false claims action on behalf of the government, alleging that a chain of subcontractors falsely stated that the work complied with Navy specifications, and that the subcontractors had submitted invoices to the shipyards, who had been originally contracted by the Navy.
     The justices unanimously held that the former workers needed to prove that the contractors “intended that the false statement be material to the Government’s decision to pay or approve the false claim.”
     The high court vacated the 6th Circuit’s holding that the plaintiffs must only prove that false statements influenced the decisions of other companies to pay false claims using government money.

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