In one of the most highly-anticipated decisions of this term, on Thursday, June 1, 2023, the United States Supreme Court ruled that a contractor’s liability in False Claims Act (FCA) cases hinges on subjective intent — i.e., whether that defendant believed, recklessly or otherwise, that claims it submitted to the government were false at the time it submitted those claims.
In two1 previous articles, we analyzed the significance of the Supreme Court’s decision in this pair of FCA cases. Prior to oral argument on April 18, 2023, many felt that both the arguments purported by the government and those urged by the defense bar had a realistic chance of success. With the Court’s decision today, however, government contractors should brace for impact.
At oral argument, the government asked the Supreme Court to preserve the relevance of subjective intent. It argued that upholding the Seventh Circuit’s decisions in SuperValu and Safeway would undermine enforcement and incentivize bad actors to come up with crafty, post-hoc arguments for why a claim it submitted was not false. The scales seemed to tip in favor of the government at oral argument with Justices Gorsuch, Jackson, and Kagan focusing on the scienter element of the FCA and reasoning that knowledge is an issue of fact, best resolved at the summary judgment stage or at trial, which forecasted the Court’s decision today.
In writing unanimously for the Court, Justice Clarence Thomas vacated the decisions in SuperValu and ...
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