The U.S. Supreme Court will soon clarify the knowledge requirement for False Claims Act (FCA) cases. Specifically, the Court will determine whether FCA liability should be rejected wherever there is an objectively reasonable interpretation of the requirement at issue, regardless of a defendant’s subjective intent. Considering that the FCA prescribes treble damages and is used to obtain billions of dollars in annual civil settlements and judgments, a decision impacting its requirements and availability will significantly impact companies that conduct any business with the federal government.
On January 13, 2023, the Supreme Court agreed to hear two FCA cases, U.S. ex rel. Schutte et al. v. SuperValu Inc. et al., and U.S. ex rel. Proctor v. Safeway Inc. In each case, the Seventh Circuit issued 2-1 panel decisions shielding SuperValu and Safeway, respectively, from FCA liability for fraudulent billing practices related to the usual and customary pricing of pharmaceutical drugs.
The Seventh Circuit rejected FCA liability because the defendants’ conduct conformed to objectively reasonable interpretations of ambiguous regulations, and there was no authoritative guidance to the contrary. In doing so, the Seventh Circuit imputed the standard articulated in Safeco Insurance Co. v. Burr, 551 U.S. 47 (2007) (the Safeco Standard), a case generally related to the Fair Credit Reporting Act (the FCRA), 15 U.S.C. § 1681n(a). Applying the Safeco standard to the FCA, the court explained...
UK consumers received GBP 3.5 billion in refunds due to friendly fraud over the past 12 months, according to emerchantpay. The company estimated that 6.5 million people received money back after m...