On January 13, 2023, the United States Supreme Court granted certiorari1 to review the False Claims Act (“FCA”) scienter standard in two FCA whistleblower cases from the Seventh Circuit, U.S. ex rel. Schutte v. SuperValu Inc., et al., No. 21-1326 and U.S. ex rel. Proctor v. Safeway, Inc., No. 22-11. The Supreme Court will decide whether a defendant’s objectively reasonable, but incorrect, interpretation of a legal requirement constitutes a “knowing” violation of the FCA.
The decision will be crucial for businesses who regularly submit claims to the government - especially for the heavily regulated healthcare industry, which often faces ambiguous legal standards. The Supreme Court's review will clarify what is required to invoke an "objectively reasonable" defense to scienter in FCA cases. The decision may also provide clarity on what constitutes “authoritative” guidance. In the interim, businesses should consider the process by which they document interpretations of an ambiguous legal standard that may result in FCA liability.
The False Claims Act ("FCA"), 31 U.S.C. §§ 3729 - 3733, sets forth liability, inter alia, for any person who knowingly submits or causes another to submit a false claim to the government, or knowingly makes a false record or statement to get a false claim paid by the government.2 In addition, the FCA provides liability for any person who avoids having to pay money to the government.3 Any person found to have violated the FCA is...
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