On June 1, 2023, the United States Supreme Court issued its ruling in two consolidated cases concerning the False Claims Act (FCA), United States ex rel. Schutte et al. v. SuperValu Inc. et al., Case No. 21-1326, and United States ex rel. Proctor v. Safeway, Case No. 22-111. The Court’s opinion has substantial implications for healthcare, construction, and other government contracting companies faced with navigating ambiguous government regulations that are often the basis for FCA prosecutions. Writing for a unanimous court, Justice Clarence Thomas emphasized the importance of a defendant’s subjective beliefs about compliance in applying the FCA’s knowledge requirement and rejected the argument that a violation of the FCA was precluded if a defendant’s conduct was consistent with an “objectively reasonable” interpretation under the law. In light of the Court’s ruling, contractors would be wise to document their good-faith compliance efforts contemporaneously and in a non-privileged manner, should their efforts at compliance be questioned during a later government investigation. This case reinforces and further refines a prior unanimous decision issued by the Court and drafted by Justice Thomas in Universal Health Services v. United States ex rel. Escobar, 579 U.S. 176 (2016).
Prior to the Court’s ruling on June 1, under the FCA, for a defendant to be held liable for submitting a false claim to the government for payment, the government stood on the standard or burden of...
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