What Happened
On June 1, 2023, the US Supreme Court unanimously held in United States ex rel. Schutte v. SuperValu, Inc. (the “Schutte decision”) the False Claims Act’s (“FCA”) scienter requirement turns on whether a defendant subjectively believed its claim was false, not whether a hypothetical, “objectively reasonable” person would have concluded the claim was false.
Analysis
The FCA
The FCA imposes liability on those who “knowingly present . . . a false or fraudulent claim [to the government] for payment or approval.” 31 U.S.C. § 3729(a)(1)(A). To establish a claim under the FCA, a plaintiff must show (i) the claim presented was false, and (ii) the defendant knew that the claim was false. To facilitate enforcement of the statute, the FCA permits private entities to bring qui tam lawsuits—sometimes called “whistleblower suits”—on behalf of the United States against defendants believed to have violated the FCA. The United States will then decide whether to intervene and prosecute the FCA claims as a plaintiff or decline to intervene and leave the whistleblower to continue prosecuting the action on the United States’ behalf.
United States ex rel. Schutte v. SuperValu, Inc.
The Schutte decision stems from a qui tam lawsuit alleging that Defendants SuperValu and Safeway defrauded the federal government by submitting false claims for reimbursement under Medicare and Medicaid. SuperValu and Safeway operated hundreds of retail pharmacies nationwide. Under Medicare and...
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