The U.S. Supreme Court on April 18, 2023, heard oral arguments on a critical issue in False Claims Act (FCA) cases – the defendant's state of mind (i.e., scienter). The statute ascribes liability to anyone who "knowingly" submits false claims to the government.1 The statute defines knowingly as encompassing "actual knowledge" as well as "reckless disregard" and "deliberate ignorance," but no specific intent to defraud is required.2
The court was asked to determine whether a defendant's subjective intent can ever be considered relevant when the defendant's interpretation of a rule or regulation is deemed objectively reasonable. The Supreme Court agreed to hear the case, United States ex rel. Schutte v. SuperValu, Inc.,3 after the U.S. Court of Appeals for the Seventh Circuit held that subjective intent is irrelevant to the scienter inquiry under the FCA when a defendant's interpretation is considered objectively reasonable. Relators and the government sought certiorari, arguing the interpretation was contrary to the plain text of the FCA. They theorized the decision would open up the floodgates to post hoc rationalizations that ignore any contemporaneous beliefs defendants had that their conduct was in fact wrongful.
The Seventh Circuit's holding stemmed from the Supreme Court decision in Safeco Insurance Co. of America v. Burr,4 a case interpreting a similar scienter requirement under a different statute. There, with respect to reckless disregard or willfulness, the...
A slew of NYPD officers recounted on Sunday horror stories from their careers in which they say they were falsely accused of sexual misconduct and, despite being exonerated, had the allegations sh...