Government contractors, health care providers and many other parties who submit claims for payment to the federal government are subject to liability under the False Claims Act (FCA). This month, the U.S. Supreme Court issued a decision that could potentially make more actions subject to prosecution under the FCA. Those submitting claims for payment to the government should be aware of these developments and have processes in place to avoid costly mistakes.
The Supreme Court issued its decision in United States ex rel. Schutte v. SuperValu, Inc. on June 1, 2023. The major takeaway from this case is a clarification of when a defendant can be deemed to have “knowingly” submitted a false claim for payment. In this newly refined definition, a defendant knowingly submits a false claim when they subjectively believe the claim is false at the time of submission. Some previous circuit court decisions had denied FCA liability so long as the claim was submitted with an “objectively reasonable interpretation” of the relevant law, regardless of whether the submitter believed it to be false or not.
While these may seem like relatively minor distinctions, the SuperValu decision has the effect of taking away a defense to FCA liability that had been successfully employed in five of the circuits. Specifically, even if the submitter of the claim had believed the claim to be false at the time of submittal, as long as there was an “objectively reasonable interpretation of the relevant law”...
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