On April 18, 2023, the Supreme Court heard oral argument from three whistleblowers requesting that the Court revive their lawsuits against retail pharmacies SuperValue and Safeway. See https://www.scotusblog.com/2023/04/justices-will-consider-false-claims-in-two-pharmacy-cases/. The whistleblowers accused the companies of unlawfully pocketing millions of taxpayer dollars by knowingly overbilling government health insurance programs for prescription drugs. The whistleblowers brought the case under the False Claims Act—the government’s primary anti-fraud statute. Under the FCA, a defendant is liable for “knowingly” submitting a false claim to the government for payment. Knowledge can constitute either actual knowledge, deliberate ignorance, or reckless disregard.
The whistleblowers contend that the companies offered prescription drugs at discounted prices to customers paying out of pocket, while charging higher rates to the government. Under Medicare and Medicaid programs, pharmacies are required to charge the same price to the government as the general public.
The case centers on whether companies can avoid liability for fraud by showing that an “objectively reasonable” reading of the law supported their conduct, even if the company believed that its conduct was unlawful. Lawyers for the whistleblowers argued such a reading would permit “some of the worst offenders to escape liability.” And Joe Biden’s administration supported the whistleblowers, arguing that companies...
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