The U.S. Supreme Court has begun considering a case that could have major implications for whistleblower lawsuits. The case involves three whistleblowers who have accused pharmacy operators of knowingly overbilling government health insurance programs for prescription drugs, thereby pocketing millions of taxpayer dollars.
The whistleblowers filed their litigation under the False Claims Act, which allows individuals to sue on behalf of the U.S. government when they have evidence of fraud against federal programs. Seeking monetary damages, the whistleblowers accused Safeway Inc, owned by Albertsons Companies Inc, and SuperValu Inc, part of United Natural Foods Inc, of offering most customers prescription drugs at discounted prices paying out of pocket while improperly charging higher rates to the government.
Pharmacies receive reimbursement from government healthcare programs for dispensing covered drugs to beneficiaries. The whistleblowers argue that federal law requires pharmacies to bill the Medicare and Medicaid programs the same prices charged to the general public under a rate known as a pharmacy’s “usual and customary” price. They also claim that both companies knew they were defrauding the government and worked to conceal their pricing practices.
The central issue in the case is whether companies can avoid liability for fraud by demonstrating that an “objectively reasonable” reading of the law supported their conduct – regardless of whether they truly believed that...
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