The U.S. Supreme Court has issued two major decisions on the False Claims Act ("FCA") this month. In United States ex rel. Schutte v. SuperValu, Inc. and United States ex rel. Proctor v. Safeway, Inc., the Court rejected an "objective reasonableness" knowledge standard in cases where the false claim is based on an alleged misrepresentation of compliance with an ambiguous legal requirement, in favor of one based on the defendant's subjective belief about that requirement. In United States ex rel. Polansky v. Executive Health Resources, Inc., the Court held that the U.S. government may move to dismiss a qui tam case that it has declined to join as long as it subsequently intervenes, and that such dismissals will be governed by Federal Rule of Civil Procedure 41(a). Both decisions have significant implications for current and future FCA litigation.
In consolidated cases decided June 1, 2023, the Court addressed the scienter standard for when an FCA case is premised on an alleged misrepresentation of compliance with an ambiguous legal requirement. In doing so, it rejected what had been previously interpreted as a safe harbor for objectively reasonable interpretations of such requirements, in favor of a defendants' subjective beliefs about such requirements (and violations of them). In a unanimous but narrow decision authored by Justice Thomas, the Court held that if...
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