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1 1 (April 13, 2023)

handle is hein.crs/govelgt0001 and id is 1 raw text is: Congressional_______ AResearch Service Supreme Court to Consider the Meaning of Knowingly Under the False Claims Act April 13, 2023 On April 18, 2023, the Supreme Court is scheduled to hear arguments in a pair of False Claims Act (FCA) cases involving allegations that retail pharmacies charged the government inflated prices for prescription drugs under Medicare and Medicaid. The FCA is a qui tam statute that authorizes private individuals- called relators-to sue to recover money on behalf of the government from any person who knowingly submitted false claims to the government for payment. These relators, who are often whistleblowers, are awarded a portion of the proceeds in a successful action or settlement. The cases before the Supreme Court, consolidated as United States ex rel. Schutte v SuperValu, Inc., concern the scienter, or mental state, element of an FCA violation. Specifically, the Court will consider whether a defendant knowingly violates the FCA if it is aware of a substantial risk that its payment submissions might violate a legal requirement but the submissions are also consistent with an objectively reasonable (but wrong) interpretation of that requirement. Stated another way, does the defendant's subjective intent at the time of submission matter if its incorrect interpretation of the legal requirement was objectively reasonable? Resolution of this issue is important not only for guidance in FCA cases-where circuit courts are divided-but potentially also for a variety of federal laws whose civil penalties turn on whether the defendant acted knowingly. The FCA's Knowledge Standard and the Allegations in Schutte A person is liable for a civil penalty and triple damages under the FCA if the person knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval. The FCA defines this scienter requirement, stating that a person acts knowingly when, with respect to information, the person (1) has actual knowledge of the information, (2) acts in deliberate ignorance of the truth or falsity of the information, or (3) acts in reckless disregard of the truth or falsity of the information. Knowledge can be established without proof of specific intent to defraud. The Schutte case involves two qui tam actions on behalf of the federal government and several states. The relators allege that the defendants, operators of hundreds of retail pharmacies, violated the FCA by knowingly reporting a false price for certain prescription drugs in seeking government reimbursement. Specifically, the relators allege that the defendants reported their higher, retail prices instead of the lower, discounted prices offered to many consumers through price-match and membership programs. This Congressional Research Service https://crsreports.congress.gov LSB10948 CRS Legal Sidebar Prepared for Members and Committees of Congress

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