On January 13, 2023, the Supreme Court granted certiorari in a pair of consolidated cases from the Seventh Circuit that could result in one of the most consequential False Claims Act (FCA) decisions since the FCA was amended in 1986. See U.S. ex rel. Schutte v. SuperValu Inc., No. 21-1326, and U.S. ex rel. Proctor v. Safeway, Inc., No. 22-111.
At issue is whether a defendant can act “knowingly” under the FCA when the relevant legal requirement for payment is ambiguous, and the defendant’s interpretation is objectively reasonable—and whether scienter can be determined without a separate inquiry into the defendant’s subjective intent at the time of the conduct in question. The question formally presented in the petitions is “whether and when a defendant’s contemporaneous subjective understanding or beliefs about the lawfulness of its conduct are relevant to whether it ‘knowingly’ violated the False Claims Act.”
The issue goes to the essence of FCA liability in cases involving so-called “legal falsity” in which a defendant is alleged to have misrepresented its compliance with a legal requirement in connection with a claim for payment from the government.
In the cases before the Supreme Court, split panels of the Seventh Circuit held that the FCA’s scienter standard is not met when: (i) the defendant acts consistent with an “objectively reasonable” interpretation of an ambiguous legal requirement, and (ii) there was no “authoritative guidance” from a circuit court or relevant...
Dish Wireless LLC agreed to pay roughly $17 million to resolve allegations that it violated the False Claims Act, common law, and the Communications Act of 1934 relating to claims submitted to Fed...