United States, et al., ex rel. Michael Angelo and MSP WB, LLC v. Allstate Insurance Company, et al.

A relator may bring a False Claims Act (“FCA”) action under 31 U.S.C. § 3729(a)(1)(G) when a qui tam defendant “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government” or “knowingly conceals or knowingly and improperly avoids or decreases” such an obligation, also known as a “reverse false claim.” Certain circuits have taken different approaches as to what “obligation” may underly a reverse false claim. Most circuits have recognized reverse false claims involving a defendant’s direct obligation to the Government. The Fifth Circuit has held that a reverse false claim can also involve a defendant’s impairment of a third party’s obligation to the Government, or an “indirect reverse false claim.” In the decision below, the Sixth Circuit concluded that § 3729(a)(1)(G) only permits reverse false claims based on a defendant’s direct obligation. Additionally, while claims under the False Claims Act are generally required to be pleaded with particularity under Fed. R. Civ. P 9(b), knowledge may be pleaded generally under Rule 9(b). In the decision below, the Sixth Circuit required pleading knowledge with particularity in support of Petitioners’ reverse false claims allegations. The questions presented are: (1) Whether relators can state a reverse false claim based on defendants’ impairment of obligations of third-party government contractors to the Government; and (2) whether knowledge must be pleaded with particularity to state a reverse false claim.