The U.S. Supreme Court recently agreed to hear two cases on the key question of when a defendant can be found to have “knowingly” violated the False Claims Act (FCA). This sets the stage for a potential landmark FCA decision that may change how courts handle FCA cases where complex regulatory provisions are at issue.
The question before the Court is whether a defendant’s subjective understanding or belief in the lawfulness of conduct is relevant to whether it knowingly violated the FCA. In the two cases at issue, the Seventh Circuit found defendants not liable under the FCA for allegedly fraudulent billing because each acted consistent with an “objectively reasonable” view of an ambiguous regulation and there was no authoritative guidance on the issue. The Seventh Circuit found that subjective intent is irrelevant to whether a defendant acted with knowledge.
The False Claims Act imposes liability where a defendant “knowingly” presents false claims or makes false statements to the government.[1] The FCA defines “knowingly” to include (1) actual knowledge; (2) deliberate ignorance; or (3) reckless disregard of the truth or falsity of information.[2] Proving scienter is an essential element of an FCA claim. Circuits are split on the application of this requirement in cases involving a violation of an ambiguous legal requirement. Four circuits have held that the question is whether a defendant subjectively knew or believed (or had reason to know or...
UK consumers received GBP 3.5 billion in refunds due to friendly fraud over the past 12 months, according to emerchantpay. The company estimated that 6.5 million people received money back after m...