Imagine you own a company that does business with a federal agency. The company’s contract with the agency specifies that the company will deliver widgets of a particular quality. The company delivers widgets to the agency. Years later, two former employees file a whistleblower action alleging that the company violated the FCA because the widgets did not live up to the contract’s specifications. The former employees sue the company for three times the amount of damages the government allegedly sustained, as well as millions of dollars in additional penalties. The case is tried to a jury, but after the former employees present their case, the district court grants the company’s motion to dismiss because the former employees’ legal theory misinterprets the FCA. The case eventually goes up to the U.S. Supreme Court, which unanimously agrees with the company and sends the case back down for further proceedings. Congress does not agree with the Supreme Court’s decision, however, so it decides to amend the FCA. In doing so, Congress uses language suggesting that certain of the amendments might apply retroactively to FCA cases that were pending two days before the Supreme Court’s decision.

With the government’s support, the former employees seek to apply the newly revised version of the FCA to their case even though the widgets at issue were delivered more than a decade earlier. The district court refuses to do so, finding that (1) the statute should be interpreted to apply to payment claims pending two days before the Supreme Court’s decision, not FCA cases pending as of that date; and (2) if applied to pending FCA cases in the manner advocated by the former employees and the government, the statute would violate the Constitution’s Ex Post Facto Clause given the punitive nature of the FCA. The circuit court of appeals disagrees, and finds that the new version of the statute applies even though other circuits have held to the contrary.

The above is a simplified version of what led to the United States Court of Appeals for the Sixth Circuit’s recent decision in Sanders v. Allison Engine Co., — F.3d —, No. 10-cv-3818, 2012 U.S. App. LEXIS 22655 (6th Cir. Nov. 2, 2012), mot. to publish granted, No. 10-cv-3818 (6th Cir. Nov. 29, 2012), reh’g denied, No. 10-cv-3818 (6th Cir. Dec. 5, 2012). The Sixth Circuit’s decision deepens the well-established split in the federal circuit courts of appeals as to whether certain amendments made to the FCA by the Fraud Enforcement and Recovery Act of 2009 (FERA) apply to pending cases or pending payment claims. See *25 (surveying conflicting views of the Second and Seventh Circuits, which interpret the amendments as applying to pending FCA cases, with those of the Second and Eleventh Circuits, which interpret the amendments as applying to pending payment claims). Among other things, FERA amended the FCA in response to the Supreme Court’s unanimous decision in Allison Engine Co. v. Sanders, 128 S. Ct. 2123 (2008), which held that the FCA’s false-statement provision required proof that a defendant made a false statement with the specific intent of getting a false claim paid by the government itself. That is no longer required under the as-amended FCA. See 31 U.S.C. § 3729(a)(1)(B), (b)(2)(A).

In light of the express disagreement of authority as to the retroactivity of the FERA — which the government cited in successfully moving the Sixth Circuit to publish its opinion – there is a significant possibility the Justices will be called upon to resolve this issue in the next year or two. Until that happens, however, significant uncertainty will remain as to what version of the statute applies in a good number of FCA cases. Stay tuned.