Two whistleblowers on Tuesday will ask the US Supreme Court to revive their False Claims Act cases, contending a lower court applied an improper knowledge standard when it rejected their claims that a pair of supermarkets overcharged the government for prescription drugs.
The companies, SuperValu Inc. and Safeway Inc., didn’t knowingly overcharge because they followed an objectively reasonable interpretation of the law, the US Court of Appeals for the Seventh Circuit ruled in the two cases.
The Seventh Circuit relied on an improper interpretation of the FCA’s scienter standard by holding that a defendant that intentionally defrauds the government doesn’t act “knowingly” as long as they can later rationalize the misconduct, the whistleblowers’ brief said.
How the Supreme Court views FCA scienter—and what makes a company’s approach to a regulation reasonable—could have a profound impact on FCA litigation, where billions of dollars are at stake each year.
The grocery chains are accused of telling Medicaid and Medicare they sought reimbursement at their “usual and customary” price for the drugs, even though retail customers paid less.
According to the whistleblowers, the cases should be reopened because SuperValu and Safeway “believed” they were improperly billing the government programs when they sought reimbursement. A misrepresentation made without...
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