On June 1, 2023, the Supreme Court issued a unanimous decision in the consolidated cases United States v. SuperValu Inc. and United States v. Safeway, Inc. holding that the False Claims Act’s (“FCA”) scienter element refers to a defendant’s knowledge and subjective beliefs—not what an objectively reasonable person would have known or believed. No. 21-1326 (June 1, 2023).
The Court’s decision arose out of two consolidated Seventh Circuit cases concerning national supermarket chains’ submissions to Medicare and Medicaid programs for reimbursement. The Federal Centers for Medicare and Medicaid Services (“CMS”) has promulgated regulations that limit the reimbursement for many drugs to the “usual and customary charges [for the drug] to the general public.” Between 2006 and 2016, the supermarkets implemented price matching programs with their competitors that caused them to offer many prescription medications at discounted prices. Rather than submit the discounted prices to CMS for reimbursement, both supermarkets allegedly submitted the higher, non-discounted prices to CMS. Through this period, various individuals and executives at these companies also allegedly raised questions regarding the meaning of “usual and customary” when viewed in the context of the supermarkets’ use of discounted prices.
The Seventh Circuit affirmed summary judgment rulings in favor of the supermarkets. In doing so, the Seventh Circuit ruled that Safeco v. Burr, 551 U.S. 47 (2007) mandated a two-step...
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