On January 13, the U.S. Supreme Court agreed to hear two consolidated False Claims Act (FCA) whistleblower cases with tremendous implications for the ability of whistleblowers and the government to hold fraudsters accountable under the FCA.
The two cases, U.S. ex rel. Schutte v. SuperValu and U.S. ex rel. Proctor v. Safeway, both stem from qui tam whistleblower suits accusing pharmacy operators of defrauding Medicare and Medicaid. Whistleblowers allege that SuperValu and Safeway overbilled Medicare and Medicaid by billing for prescription drugs based upon artificially high drug prices when in actuality they were charging customers much lower prices.
Under the FCA, whistleblowers with knowledge of government contracting fraud may file qui tam whistleblower lawsuits against the fraudsters on behalf of the U.S. government. Since 1986, qui tam suits have allowed the government to recover over $70 billion from fraudsters.
In both of the cases consolidated by the Supreme Court, the Seventh Circuit ruled that while the pharmacy operators did overbill the government, they did not commit fraud because they operated under an “objectively reasonable” interpretation of the law. The Seventh Circuit ruled that this “objectively reasonable” interpretation of the law means the company did not commit fraud even if the company did not actually believe in the interpretation and actively sought to defraud the government.
Since the Seventh Circuit rulings, whistleblower advocates and the...
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