In United States v. Hawley, No. 08-2992, 2010 WL 3292710 (8th Cir. Aug. 23, 2010), the Eighth Circuit reversed the District Court’s grant of summary judgment to the Defendants (Hawley), finding that the government had cognizable claims under the FCA prior to the expansion of the scope of the FCA by the Fraud Enforcement and Recovery Act (FERA).
Hawley, an insurance agent, was alleged to have caused farmers to submit false claims to North Central Crop Insurance, Inc. (NCCI), a private insurance company, which then submitted claims for reimbursement to the Federal Crop Insurance Corporation (FCIC), pursuant to a federal statute establishing a federal crop insurance program. See 7 U.S.C. §§ 1501-1524. The District Court found that Hawley did not cause a false claim to be presented to the federal government under section 3729(a)(1) of the pre-FERA FCA. Rather, the government had only shown that Hawley allegedly caused claims to be presented to NCCI. The District Court further held that, while the government’s claims under 3729(a)(2) and 3729(a)(3) did not require “presentment” to the federal government, the claims failed under the Supreme Court’s decision in Allison Engine co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008), because the government did not show that Hawley intended for the government to rely on the allegedly false documents as a condition of reimbursing NCCI or that Hawley conspired to defraud the government.
The Eighth Circuit held that the government had a claim under 3729(a)(1) – causing a false claim to be submitted to the federal government – because Hawley caused NCCI (the private insurer) to submit claims to the FCIC (the federal government).
The Eighth Circuit next considered the government’s claims under 3729(a)(2) and (a)(3). Under Allison Engine, the Supreme Court held that “to establish liability under § 3729(a)(2) and (a)(3), an FCA plaintiff 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.” FERA eliminated the language that a false statement be made “to get a false or fraudulent claim paid or approved by the Government.” See 31 U.S.C. § 3729(a)(1)(B). However, the parties did not address the statutory provision which would have determined whether FERA applied retroactively in this case.
FERA provides that the new section 3729(a)(1)(B) “shall take effect as if enacted on June 7, 2008 [two days before the Supreme Court’s decision in Allison Engine], and apply to all claims under the False Claims Act that are pending on or after that date…” The Eighth Circuit noted that other courts, including the Eleventh Circuit, the Eastern District of Arkansas, and the District of D.C., have held that “claim” referred to claims for payment that were pending as of June 7, 2008, not claims in lawsuits that were pending. See also “Texas Court Holds FCA Amendment Applies Retroactively to Claims for Payment, Not Lawsuits.” Since the issue was not raised by the parties, the court did not decide the issue.
Moreover, the Eighth Circuit found that there was a genuine issue of material fact as to whether the government could prove its claims under 3729(a)(2) and (a)(3) irrespective of the FERA amendment. Notwithstanding the attenuated link between Hawley and the claim submitted by NCCI to the federal government, the court held that a reasonable jury could conclude that Hawley intended the federal government to rely upon the allegedly false claim submitted to the NCCI by the farmers in determining whether to approve the claim submitted by the NCCI to the FCIC.