What Happened
Last week, the Supreme Court granted certiorari and consolidated two False Claims Act (“FCA”) cases that ask the Court to determine “whether and when a defendant’s contemporaneous subjective understanding or beliefs about the lawfulness of its conduct are relevant to whether it ‘knowingly’ violated the False Claims Act.” The grant follows disagreements in the courts of appeals over the scope of the FCA’s knowledge requirement.
U.S. ex rel. Schutte v. SuperValu Inc. and U.S. ex rel. Proctor v. Safeway, Inc.
To prove scienter under the FCA, the government or relator plaintiff must prove the defendant acted “knowingly,” or with “reckless disregard” or “deliberate ignorance” of the truth. The question the Justices will consider in the consolidated FCA cases is whether that standard can be met where a defendant had an objectively reasonable interpretation of the law or regulation.
The relator whistleblowers in Safeway and SuperValu are former employees who alleged that the supermarkets overcharged Medicare and Medicaid for generic drugs because they intentionally failed to include all available discounts they offered to retail customers in the “usual and customary” (“U&C”) pricing they offered to the government. The government declined to intervene in both cases.
The Seventh Circuit, in 2-1 decisions, held that Safeway and SuperValu were not liable under the FCA because their interpretations of U&C pricing under an ambiguous regulation were “objectively...
Tehran – Saba: The Iranian Foreign Ministry condemned the subversive actions taken by the rulers of Abu Dhabi against the Islamic Republic of Iran. Last night, Tasnim News Agency reported that the...