The U.S. Supreme Court clarified the standard for a defendant's state of mind in False Claims Act ("FCA") cases, holding that a defendant acts "knowingly"—which the FCA defines also to include deliberate ignorance and reckless disregard—if it actually knows its conduct is illegal, knows of a substantial risk of unlawfulness and avoids learning about the conduct's illegality, or ignores a substantial and unjustifiable risk of illegality.
On June 1, 2023, the U.S. Supreme Court addressed a key issue in FCA cases: What does it mean for a defendant to act "knowingly" as required for FCA liability? U.S. ex rel. Schutte v. SuperValu Inc.and U.S. ex rel. Proctor v. Safeway, Inc. both presented the question whether a defendant whose conduct comported with an objectively reasonable interpretation of an underlying statutory or regulatory rule can nonetheless have "knowingly" submitted claims that falsely certified compliance with that rule in violation of the FCA. (We previously analyzed the holding in Schutte as well as the Supreme Court's decision to hear both cases.) The Court answered yes. The FCA defines "knowingly" to include actual knowledge, deliberate ignorance, or reckless disregard. The Court held that—regardless of whether a defendant's conduct aligned with a reasonable understanding of the law—a defendant can be liable if it either (i) "actually knew" that its conduct was unlawful, (ii) was "aware of a substantial risk" of unlawfulness "and intentionally avoided...
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