Where a relator alleged facts making it plausible that his former employer’s interpretation of a Medicaid statute was incorrect, but that it continued submitting claims using its own interpretation, the district court erred when it held he failed to sufficiently allege scienter.
Troy Sheldon brought this qui tam action against his former employer, Forest Laboratories LLC. Sheldon alleges that Forest falsely reported the lowest price it charged private companies for its pharmaceuticals, thereby leading to Forest’s overcharging the federal government and state governments for drugs purchased for Medicaid recipients.
Sheldon alleges that Forest acted with, at a minimum, reckless disregard for the truth or falsity of its reported lowest prices when it submitted these reports because it had been warned that its interpretation of the Medicaid Rebate Statute was not correct. The district court dismissed Sheldon’s complaint, concluding that the facts as pled could not satisfy the scienter requirement of the False Claims Act, or FCA.
The FCA takes a broad approach to the level of knowledge necessary for liability. A defendant can act with actual knowledge, with deliberate ignorance or with reckless disregard of the truth or the falsity of the information contained in the claims.
Actual knowledge refers to information of which a defendant is actually aware. Deliberate ignorance “encompasses defendants who are aware of a substantial risk that their statements are...
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