The False Claims Act imposes liability for false and fraudulent claims a defendant submitted with the requisite state of mind, or scienter. Before the Supreme Court handed down its June 1, 2023, decision in the combined SuperValu and Safeway cases, several federal circuit courts examining the issue had held that scienter could not be established when a defendant’s actions under an ambiguous regulation were consistent with an objectively reasonable standard – notwithstanding what the defendant itself may have believed.
So had held the district court and Seventh Circuit in the SuperValu case.
On June 1, the Supreme Court reversed. The unanimous court, in a decision authored by Justice Thomas, held that the scienter inquiry under the False Claims Act turns on a defendant’s contemporaneous subjective belief. In other words, scienter can be established if the defendant subjectively thought its claims were inaccurate, even if the defendant could justify them post hoc as based on an objectively reasonable interpretation.
The issue in SuperValu involved the interpretation of an ambiguous phrase, for which SuperValu had argued no guidance had been issued, requiring providers to report their “usual and customary” prices for claimed drugs. In fact, many customers were paying less than the reported prices due to price matching and other discount programs. From the record, evidence suggested that some key SuperValu executives had voiced concerns, or believed that the phrase required a...
Welcome to Reality Check, NewsGuard’s nonpartisan newsletter that tracks the false claims and conspiracy theories that shape our world — and who’s behind them. Please support us by becoming a premi...