Writing for a unanimous Supreme Court of the United States, on June 1, 2023, Justice Clarence Thomas issued a decision clarifying the knowledge requirement for cases brought pursuant to the False Claims Act (FCA). In overturning the consolidated cases of United States ex rel. Schutte et al. v. SuperValu Inc., et al. and United States ex rel. Proctor v. Safeway, Inc., the Supreme Court rejected the Seventh Circuit’s focus on the objectively reasonable interpretation of an ambiguous rule or regulation. Instead, the Court held that the FCA’s scienter requirement refers to the defendant’s subjective knowledge and belief at the time the claim is submitted.
Case Background
Both Medicare and Medicaid limit reimbursement for prescription drugs to the pharmacy’s “usual and customary charge” for the general public. In the consolidated cases, relators brought a qui tam suit alleging that both pharmacies failed to disclose “usual and customary” drug prices when submitting claims for reimbursement to Medicare and Medicaid.
Relators alleged that both SuperValu and Safeway offered price-match programs to match competitor pricing for generic drugs, which were significantly lower than the pharmacies’ disclosed “usual and customary prices.” Rather than submit the lower prices for reimbursement, the pharmacies submitted the higher, non-discounted prices.
The Decisions
The District Court held that the pharmacies should have disclosed the lower, discounted amounts as the “usual and customary...
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