Last month in United States ex rel. Schutte, et al. v. SuperValu Inc. et al, the Supreme Court unanimously held (with Justice Thomas writing the opinion) that the False Claims Act’s (“FCA”) scienter element refers to a defendant’s knowledge and subjective beliefs — not to what an objectively reasonable person may have known or believed. Refer to our previous blog post for more information on this decision.
Interestingly, in issuing that opinion, the Court may have opened the door to what will ultimately become intense disagreement between the Government and relators on the one hand and FCA defendants on the other as to the meaning of the term “knowingly” as used in the FCA and, in particular, the term “reckless disregard” as it relates to “knowingly.” Determinations on this meaning may have subsequent important implications in FCA litigation.
The FCA imposes liability on those who “knowingly” present a false or fraudulent claim for payment or approval with respect to an item or service under the Medicare or Medicaid Programs.
In SuperValu, a whistleblower/relator sued pharmacies under the FCA alleging that they knowingly presented false claims when they claimed their non-discounted prices were their “usual and customary charges” as permitted by Medicare and Medicaid, rather than the discounted prices they often charged.
The defendants argued that notwithstanding that, they may have, in fact, believed the non-discounted charges were not their “usual and...
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