In a unanimous decision yesterday, the U.S. Supreme Court, in an opinion written by Justice Thomas, ruled that the False Claims Act's ("FCA") scienter element refers to a defendant's knowledge and subjective beliefs - not to what an objectively reasonable person may have known or believed.

The case, U.S. ex rel. Schutte v. SuperValu Inc., involved qui tam whistleblowers ("petitioners") asserting that retail pharmacies Safeway and SuperValu ("respondents") violated the FCA by knowingly submitting claims to Medicare and Medicaid for reimbursement based on what they reported as their "usual and customary" charges (under those programs reimbursement is limited to the lower of different amounts, one of which is a pharmacy's "usual and customary" charges) when in fact they knew that those charges were not their "usual and customary" charges given the lower amounts they were charging retail customers under various discount programs.

The FCA imposes liability on those who "knowingly" present a false or fraudulent claim for reimbursement. Accordingly, two essential elements of an FCA violation are (1) the falsity of the claim and (2) the billing party's knowledge of the claim's falsity (i.e., scienter).

The Schutte case came to the Supreme Court on appeal from the Seventh Circuit Court of Appeals holding that SuperValu's and Safeways' claims were false, but that they had not acted with the requisite scienter.

In reaching this conclusion, the Seventh Circuit relied heavily on the...

Read Full Story: https://news.google.com/rss/articles/CBMikQFodHRwczovL3d3dy5tb25kYXEuY29tL3Vu...