The Fourth Circuit Court of Appeals is now the latest in a growing number of courts holding that an objectively reasonable interpretation of governing law defeats the requisite element of intent or "scienter" under the False Claims Act (FCA). Since FCA violations must be knowing, the holding is very helpful to defendants seeking to dismiss complaints or win summary judgment.
In United States ex rel. Sheldon v. Allergan Sales, LLC, the Fourth Circuit - like all five other circuits that have considered the issue - found the scienter framework originally set forth by the Supreme Court with respect to the Fair Credit Reporting Act (FCRA) also applies to the FCA. 24 F.4th 340 (4th Cir. 2022), applying Safeco Insurance Co. of America v. Burr, 551 U.S. 47 (2007). Under this standard, a defendant cannot be found liable under the FCA if (1) its reading of applicable statutory or regulatory requirements was objectively reasonable and (2) no authoritative guidance warned it away from that interpretation.
The Sheldon relator claimed the defendant manufacturer had engaged in an allegedly fraudulent price reporting scheme under the Medicaid Drug Rebate Statute. Under the Rebate Statute, drug manufacturers seeking to have their drugs covered by Medicaid must enter into rebate agreements by which they provide quarterly rebates to states on Medicaid sales of covered drugs. The manufacturer reports the "Average Manufacturer Price" (AMP) and the "Best Price" for covered drugs to the Center...
Russian military command has been lying for the fifth month in a row about battlefield “successes,” claiming that Russian forces are advancing west of Kupiansk in the Kharkiv region. However, this...