On June 1, 2023, the Supreme Court issued a decision in the pending whistleblower cases, United States ex rel. Schutte v. SuperValue and United States ex rel. Proctor v. Safeway. The Seventh Circuit Court of Appeals previously ruled against the whistleblowers, finding the retail pharmaceutical companies had reasonably interpreted regulatory requirements and, therefore, could not have knowingly submitted a false claim to the Government. The Supreme Court, however, disagreed.
In the two cases, whistleblowers claimed that the companies were offering prescription drugs at discounted prices to customers paying out of pocket, while charging higher rates to the government. But Medicare and Medicaid require pharmacies to charge the same price to the government as the general public.
At oral argument, the companies argued that liability for fraud could be avoided by showing that “an objectively reasonable” reading of the law supported their conduct, even if the company believed the conduct was unlawful. The whistleblowers opposed, stating such a reading would permit “some of the worst offenders to escape liability.” The Government supported the whistleblowers, stating that companies should “not say things they do not believe to be true.”
In a unanimous 9-0 decision written by Justice Clarence Thomas, the Court rejected the companies “objectively reasonable” argument. The Court held the False Claims Act’s scienter requirement “refers to [defendants’] knowledge and subjective...
Schubert Jonckheer & Kolbe LLP advises Vistagen Therapeutics, Inc. (NASDAQ: VTGN) investors that the firm is investigating potential legal claims arising from alleged false statements about Vi...