The U.S. Supreme Court's October 2022 term was a blockbuster for the False Claims Act (FCA). The Court recently decided two cases poised to change the landscape of FCA cases in the lower courts: United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Polansky v. Executive Health Resources Inc. In the coming months, practitioners and those doing business with the Government will look to see how these decisions play out, and what FCA issue(s) the Supreme Court might take up next.
Schutte involved two consolidated cases with similar allegations and decisions by the district courts. In both cases, the Seventh Circuit applied the Supreme Court's decision in Safeco Ins. Co. of America v. Burr and held that even if a defendant "might suspect, believe, or intend to file a false claim, [] it cannot know that its claim is false if the requirements for that claim are unknown." Accordingly, defendants' subjective intent when they submitted their claims was "irrelevant" to the scienter analysis. Because defendants showed at summary judgment that their acts complied with a post hoc reasonable interpretation of an ambiguous regulation, the Seventh Circuit affirmed that relators could not establish scienter.
The Supreme Court disagreed. It began by explaining the narrowness of the issue before it: whether a defendants' post hoc reasonable interpretation of an ambiguous regulation matters when determining scienter under the...
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