Last week, the Supreme Court granted review to clarify the scienter requirement in False Claim Act (31 U.S.C. §§ 3729 et seq.) (FCA) cases. This significant decision will affect the scope of FCA liability by addressing what is required to prove that a defendant acted “knowingly” for purposes of the FCA.
As background, FCA liability does not attach unless a plaintiff can establish the defendant “knowingly” submitted false claims for payment to the government. The term “knowingly” is statutorily defined to refer to defendants who act with “actual knowledge,” “deliberate ignorance,” or “reckless disregard.” The plaintiff must prove only one of these to satisfy the FCA’s knowledge requirement.
Most U.S. Courts of Appeal have held that the FCA requires an objective scienter standard. This means that a defendant who acts pursuant to an incorrect interpretation of a relevant statute or regulation does not act “knowingly” under the FCA if their interpretation was objectively reasonable and there is not authoritative guidance suggesting their interpretation was wrong. A reasonable interpretation of an ambiguous law thus does not result in FCA liability.
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