In April, the Supreme Court will hear oral arguments in two cases with important implications for the False Claims Act (FCA) and Fair Credit Reporting Act (FCRA).
Both cases concern the FCA’s knowledge requirement. The question for both cases is whether the defendant’s belief holds legally true. The defendant claimed their conduct legally and intentionally violated the False Claims Act in these cases.
The court will consider whether the objective knowledge standard in the case, Safeco Insurance Co. v. Burr, applies. The mentioned case concerns FCRA violations and how it applies to the FCRA’s explicit knowledge requirement. In this case, it is a question of FCRA’s and FCA’s interaction when the supposed falsity of a claim’s basis relies on ambiguous legal obligations.
The court used long-standing common law principles when deciding whether the Safeco case violated the FCRA. When using these principles to make the decision, the court likened “reckless disregard” with “willfulness.” It also determined whether a violation exists is a contextually driven matter.
However, the Safeco case did not involve the FCA and statutory construction. Moreover, while the FCA has an explicit knowledge requirement, the FCRA does not. Instead, judges consider the defendant’s knowledge when determining willful violations of the FCRA. This fact could raise questions about whether Safeco can become an applicable precedent in a knowledge determination governed by the FCRA’s exact terms.
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