Reprinted with permission from Birmingham Medical News (July 2023)
Two False Claims Act (“FCA”) cases have recently been decided by the United State Supreme Court, further clarifying one aspect of the FCA. In the recent decisions in U.S. ex rel Proctor v. Safeway, Inc. and U.S. ex rel. Schutte et al. v. SuperValu Inc. et al., the Supreme Court ruled that FCA liability will depend, in part, on whether the defendant subjectively (not objectively) believed the claim was false, focusing on the scienter requirement of the FCA.
In these two sister FCA cases, the whistleblowers accused the supermarkets of wrongly and knowingly failing to offer all discounts when computing the pharmacies’ “usual and customary,” or “U&C”, prices they offered to Medicaid and Medicare beneficiaries for generic drugs. The whistleblowers alleged that the supermarkets’ generic drug sales to retail customers used the price of $4.00 for a 30-day supply. However, the U&C prices charged to Medicare and Medicaid did not take into consideration the $4.00 price when calculating the “usual and customary” charge for the drugs. Thus, arguably, the U&C charges to Medicare and Medicaid were artificially high.
A district court agreed that SuperValu’s discounted prices were its U&C prices and that by not reporting them, it had made false claims. However, the FCA requires not only falsity but also scienter. The district court found that the supermarket had not acted with the requisite scienter. On...
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