The Supreme Court recently issued a significant decision clarifying what it means to "knowingly" submit a false claim under the False Claims Act. At issue in United States ex rel. Schutte v. SuperValu Inc. were allegations that two retail pharmacies had a practice of asking Medicare and Medicaid to reimburse the full retail price of the drugs they dispensed, rather than the discounted prices they regularly charged customers. The Seventh Circuit granted summary judgment to Defendants SuperValu and Safeway, on the basis that they could not have "knowingly" submitted false claims because an objectively reasonable person might have thought regulations allowed the stores to seek reimbursement for the full retail price.
The Supreme Court disagreed in a unanimous decision. The FCA's scienter element, the Court explained, refers to the defendant's knowledge and subjective beliefs at the time the claim was submitted—not to what an objectively reasonable person would have known or believed.
Post-Schutte, there is no question the FCA's scienter standard is subjective, not objective. But the Court's decision leaves much more unanswered—indeed, the Court specified in several places that it was not answering several key questions. For example, how should companies proceed when regulations are ambiguous, as is often the case? And exactly what sort of subjective awareness will suffice to subject a company to liability under the FCA?
The Schutte decision arises out of...
Pakistan on April 22, Thursday urged the United Nations to call upon India to restore full implementation of the Indus Waters Treaty (IWT), warning that New Delhi’s “illegal” decision to hold the ...