Sen. Chuck Grassley (R-Iowa) told the US Supreme Court that an appeals court improperly rejected whistleblowers’ False Claims Act suit alleging that SuperValu Inc. overcharged federal healthcare programs for prescription drugs.

The US Court of Appeals for the Seventh Circuit, in a split decision, held that SuperValu didn’t knowingly misreport the usual and customary prices it charged, which caused Medicare and Medicaid to overpay. A defendant in an FCA suit lacks scienter if its conduct falls within an objectively reasonable interpretation of the law, the court said.

According to Grassley, the Seventh Circuit’s defendant-friendly scienter ruling ignored the FCA’s text and structure.

The court “held that a defendant who correctly knows an act is unlawful is immunized from FCA liability if its lawyer, years later, can cook up an interpretation of the law under which the act was arguably permissible—even if that interpretation is wrong and the defendant did not have that interpretation at the time,” Grassley’s Thursday amicus brief said.

This approach would excuse evidence of deliberate fraud unless the government can show that the defendant’s interpretation was inconsistent with authoritative guidance, the brief said.

The FCA provides that a defendant is liable if it acts with actual knowledge of false information, or acts in deliberate ignorance of the truth...

Read Full Story: https://news.bloomberglaw.com/health-law-and-business/grassley-backs-superval...