The US Supreme Court heard oral arguments on April 18 in United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway Inc., companion cases that raise the important question of whether, under the False Claims Act, a defendant’s subjective intent is relevant where the conduct is consistent with an objectively reasonable interpretation of the relevant standard and the government issued no authoritative guidance countering that interpretation.
On one side, defendants contend (and have long contended) that False Claims Act (FCA) scienter is negated in these circumstances and have relied heavily on the Supreme Court’s opinion in Safeco Insurance Co. of America v. Burr, 551 US 47 (2007), to support that position. On the other hand, the Justice Department and relators argue that a defendant’s subjective belief that the claims were false conclusively establishes the requisite scienter, regardless of any later arguments that the defendant’s conduct conformed with an objectively reasonable interpretation of the requirement.
The Supreme Court’s ultimate decision is expected to go a long way toward resolving the circuit split on this issue, with important implications for FCA practice and procedure.
The Schutte and Proctor cases came to the US Supreme Court by way of the Seventh Circuit. Both cases raise the question of whether a defendant can knowingly violate the FCA if its conduct is...
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