United States ex rel. Schutte v. SuperValu, Inc., clarifying when a defendant “knowingly” submits a false claim for payment under the False Claims Act (FCA). The Court held that a defendant that submits a false claim does so knowingly when it subjectively believes the claim is false at the time of submission. We have been tracking this decision in our FCANewsletter and our Government Contracts Insights as it changes the law of several circuits, which had held that an FCA defendant has not knowingly presented a false claim if its claim was consistent with an “objectively reasonable interpretation” of the relevant law, regardless of what the defendant believed about the claim.

Takeaways

• SuperValu holds that FCA defendants who make false claims do so knowingly when they subjectively believe at the time of submission that their claims are false.
• The SuperValu decision changes the law of the Seventh Circuit and four other circuits, which had held that if “a defendant’s [claims] were consistent with any objectively reasonable interpretation of the relevant law,” and that interpretation “had not been ruled out by definitive legal authority,” the defendant did not knowingly present a false claim.
• Some companies are concerned that this subjective standard might expose them to costlier litigation, but heightened pleading standards for fraud and other tools could mitigate this.

Background

The False Claims Act (FCA) holds defendants liable for knowingly presenting to the...

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