Scienter in False Claims Act cases: U.S. Supreme Court to review SuperValu and Safeway.
Background
In recent years, federal courts have been grappling with the scienter element of the False Claims Act (FCA), including how to assess scienter when a statutory, contractual, or regulatory obligation could be interpreted in multiple reasonable ways. The FCA imposes civil liability on persons who knowingly submit false claims for payment to the government.1 The statute defines knowingly to mean “actual knowledge,” “deliberate ignorance of the truth or falsity of the information,” or “reckless disregard of the truth or falsity of the information,”2 and “requires no proof of specific intent to defraud.”3 In cases where the plaintiff (government or relator) argues that the defendant defrauded the government by relying on an interpretation of an ambiguous term of a statute, contract, regulation, or guidance document, courts struggle to apply the statutory definition of “knowingly” when the defendant points to an objectively reasonable alternative interpretation of that term under which its claim or statement would be true.
The Supreme Court granted certiorari to resolve this question after two Seventh Circuit decisions applied the Supreme Court’s analysis of the scienter standard governing another statute to FCA cases. In 2007, the Supreme Court held in Safeco Insurance Co. of America v. Burr that relying on an “objectively reasonable” interpretation of a statute does not...
Foley partner Lisa Noller, Chair of the Firm’s Litigation Department, will be speaking at the American Bar Association’s Qui Tam & Civil False Claims and Healthcare Fraud Institute in Washingt...