Opinion ID: 109345
Heading Depth: 1
Heading Rank: 2

Heading: The Number of Statutory Forfeitures

Text: The False Claims Act provides that a person who shall do or commit any of the acts prohibited by Rev. Stat. § 5438 shall forfeit and pay to the United States the sum of two thousand dollars . . . . Rev. Stat. § 3490. Section 5438 makes it illegal for a person to present or cause to be presented for payment or approval . . . any claim upon or against the Government of the United States . . . knowing such claim to be false, fictitious, or fraudulent. It is settled that the Act permits recovery of multiple forfeitures and that it gives the United States a cause of action against a subcontractor who causes a prime contractor to submit a false claim to the Government. See United States ex rel. Marcus v. Hess, 317 U. S. 537. The precise issue presented here is whether the subcontractor should be liable for each claim submitted by its prime contractor or whether it should be liable only for certain identifiable acts that it itself committed. [4] The legislative history of the Act offers little guidance on how properly to determine the number of forfeitures. The Act was originally aimed principally at stopping the massive frauds perpetrated by large contractors during the Civil War. [5] There is no indication that Congress gave any thought to the question of how the number of forfeitures should be determined in cases involving subcontractor fraud. But the absence of specific legislative history in no way modifies the conventional judicial duty to give faithful meaning to the language Congress adopted in the light of the evident legislative purpose in enacting the law in question. The respondents defend the decision of the Court of Appeals that held them liable for only one forfeiture. In reaching this conclusion the Court of Appeals relied principally on its earlier decision in United States v. Rohleder, 157 F. 2d 126 (CA3), where it found that 16 forfeitures were appropriate because 16 contracts were involved. The Rohleder court had relied in turn on this Court's decision in United States ex rel. Marcus v. Hess, supra . The Hess case involved several electrical contractors who had collusively bid on 56 Public Works Administration projects. The District Court in Hess had imposed 56 forfeitures, rejecting the defendants' claim that only one forfeiture should have been imposed because there had been only one fraudulent scheme. This Court concluded that the District Court was correct because the incidence of fraud on each separate project was clearly individualized. 317 U. S., at 552. No party argued in this Court that more than 56 forfeitures should have been imposed, and no statement in the Hess opinion expressly limited the number of impossible forfeitures to the number of contracts involved in a case. Hess simply approved the result reached by the District Court which had found that in each project there was a single, false, or fraudulent claim. 41 F. Supp. 197, 216 (WD Pa.). The Hess case, therefore, in no way stands for the proposition that the number of forfeitures is inevitably measured by the number of contracts involved in a case. Such an automatic measurement would ignore the plain language of the statute, as the present case itself illustrates. United is liable under the statute only because it engaged in conduct that caused false claims to be submitted to the United States. While it is true that no false claims would have been submitted had United and Model not entered into a contractual relationship, the entry into that relationship did not in itself cause the submission of any false claims. Had United shipped tubes of the required quality to Model, no false claims would have been presented. By the same token, Model was not caused to file a false claim until it received shipments of falsely branded tubes from United. The language of the statute focuses on false claims, not on contracts. See n. 4, supra. That language does not support a conclusion that United is chargeable with only one forfeiture in this case. To equate the number of forfeitures with the number of contracts would in a case such as this result almost always in but a single forfeiture, no matter how many fraudulent acts the subcontractor might have committed. This result would not only be at odds with the statutory language; it would also defeat the statutory purpose. [6] Such a limitation would, in the language of the Government's brief, convert the Act's forfeiture provision into little more than a $2,000 license for subcontractor fraud. At the other extreme, the Government urges that 35 forfeitures should be assessed, in accord with the position of the District Court, which ruled that [United's fraudulent] acts caused Model to submit thirty-five false claims, each of which constituted a separate violation justifying a separate forfeiture. 361 F. Supp., at 879. The difficulty with this position is that it fails to distinguish between the acts committed by Model and the acts committed by United. [7] The distinction is a critical one, because the statute imposes liability only for the commission of acts which cause false claims to be presented. If United had committed one act which caused Model to file a false claim, it would clearly be liable for a single forfeiture. If, as a result of the same act by United, Model had filed three false claims, United would still have committed only one act that caused the filing of false claims, and thus, under the language of the statute, would again be liable for only one forfeiture. If, on the other hand, United had committed three separate such causative acts, United would be liable for three forfeitures, even if Model had filed only one false claim. The Act, in short, penalizes a person for his own acts, not for the acts of someone else. The Government's claim that United caused Model to submit 35 false claims is simply not accurate. While United committed certain acts which caused Model to submit false claims, it did not cause Model to submit any particular number of false claims. The fact that Model chose to submit 35 false claims instead of some other number was, so far as United was concerned, wholly irrelevantcompletely fortuitous and beyond United's knowledge or control. The Government suggests that United assumed the risk that Model might send 35 invoices when United sent the falsely branded tubes to Model. The statute, however, does not penalize United for what Model did. It penalizes United for what it did. The construction given to the statutory language by the District Court is, therefore, no more satisfactory than the interpretation adopted by the Court of Appeals. A correct application of the statutory language requires, rather, that the focus in each case be upon the specific conduct of the person from whom the Government seeks to collect the statutory forfeitures. In the present case United committed three acts which caused Model to submit false claims to the Governmentthe three separately invoiced shipments to Model. If United had not shipped any falsely branded tubes to Model, Model could not have incorporated such tubes into its radio kits and would not have had occasion to submit any false claims to the United States. When, however, United dispatched each shipment of falsely marked tubes to Model, it did so knowing that Model would incorporate the tubes into the radio kits it later shipped to the Government, and that it would ask for payment from the Government on account of those tubes. Thus, United's three shipments of falsely branded tubes to Model caused Model to submit false claims to the United States, and United is thus liable for three $2,000 statutory forfeitures representing the three separate shipments that it made to Model. [8]