News: SCOTUS agrees to hear case determining scienter standard for FCA cases

This judicial term, the Supreme Court of the United States (SCOTUS) has agreed to hear two joint cases regarding the standard of scienter (“intent or knowledge of wrongdoing”) in legal situations pertaining to the False Claims Act (FCA).

The cases under review, U.S. ex rel. Schutte v. SuperValu, Inc., and U.S. ex rel. Proctor v. Safeway, Inc., pertain to whistleblowers at both SuperValu and Safeway who have alleged that the drug chains knowingly overcharged Medicare and Medicaid for the cost of prescription drugs that they sold to customers at a discount, HealthLeaders reported.

The question posed before the Court, according to SCOTUS’ docket, is “Whether and when a defendant's contemporaneous subjective understanding or beliefs about the lawfulness of its conduct are relevant to whether it ‘knowingly’ violated the False Claims Act.”

In other words, in an FCA liability case, can defendants legally claim that they did not know they were in violation of the FCA if they can demonstrate an “objectively reasonable” interpretation of an ambiguous legal requirement?

Those who are urging the high court to uphold the appeals court ruling (the American Hospital Association, American Medical Association, the Pharmaceutical Research and Manufacturers of America, and the United States Chamber of Commerce) claim that they “will be forced to spend more on litigation and less on patient care.”

However, those who are urging a repeal (United States Department of Justice, Solicitor General, and the National Whistleblower Center) have argued that a decision in favor of SuperValu and Safeway would retroactively permit defendants to escape liability for conduct they knew violated the FCA.

The argument sessions for the case are set to begin on April 18, 2023.

Editor’s note: To read the SCOTUS docket related to this case, click here. To read HealthLeaders’ coverage of this story, click here.