Summary

On June 1, 2023, the Supreme Court issued a landmark decision in False Claims Act cases. In United States ex rel. Schutte v. SuperValu Inc., it unanimously held that liability under the False Claims Act depends on a defendant’s subjective belief as to whether a claim was false, and not what an objectively reasonable person may have known or believed.

The Upshot

• Prior to the Court’s ruling in SuperValu, it was unclear whether the standard for determining knowledge in the False Claims Act context was an objective or subjective one.
• In its decision, the Court held that to impose liability on a defendant for “knowingly” submitting a false claim to the government for payment, it is sufficient for a plaintiff to prove that a defendant knew or suspected the submission was false, even if an objectively reasonable person may not have known or believed otherwise.
• The decision removes a powerful False Claims Act defense that defendants could use to move for dismissal of the action or for summary judgment if they could show that an objectively reasonable person would not have known the claim was false, regardless of the defendant’s intent.

The Bottom Line

This is a pivotal decision in False Claims Act jurisprudence; by putting the defendant’s subjective knowledge at issue in each case, it will be very difficult for defendants to succeed on a motion to dismiss or on summary judgment on the basis of lack of knowledge. The issue of the defendant’s state of mind will...

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