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1 1 (June 13, 2023)

handle is hein.crs/govelxm0001 and id is 1 raw text is: Congressional_______ ~ Research Service Supreme Court Addresses Scope of False Claims Act's Knowledge Requirement June 13, 2023 On June 1, 2023, the U.S. Supreme Court decided United States ex rel. Schutte v. SuperValu Inc., a case involving the scienter, or mental state, requirement of the False Claims Act (FCA). The FCA prohibits knowingly submitting false claims to the government for payment. The Court in Schutte iled unanimously that this knowledge standard encompasses a defendant's subjective beliefs about the accuracy of its claims. The Court rejected the Seventh Circuit's conclusion that a defendant who adopts an objectively reasonable interpretation of an ambiguous legal requirement cannot act knowingly within the meaning of the FCA. The Schutte decision allows two whistleblower actions against retail pharmacies to proceed to trial. More broadly, it reinforces the Court's earlier admonitions that courts must analyze scienter requirements in the specific context of the statutory framework at issue, including any common- law concepts that Congress incorporated into the statutory text. Background on the Schutte Case As explained in more detail in an earlier Legal Sidebar, the Schutte case involves two separate qui tam actions-United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway, Inc.-that the Supreme Court consolidated for purposes of its review. Under its qui tam provisions, the FCA allows a private individual called a relator to bring a lawsuit in the government's name against a person or company that allegedly violated the act and to retain a portion of the proceeds in any successful action or settlement. In both Schutte and Proctor, the relators allege that the defendants, operators of retail pharmacies, reported inflated prices when seeking reimbursement for prescription drugs under the federal Medicare and Medicaid programs. Those programs require pharmacies to report their usual and customary charges for prescription drugs in certain circumstances. According to the relators, the defendants failed to report their widely offered discounted prices as their usual and customary prices, rendering the defendants' claims for payment under Medicare and Medicaid false. The relators further allege that the defendants submitted these false claims knowingly. A defendant who knowingly submits false claims under the FCA is liable for civil penalties and treble damages. The statute defines knowingly as acting with (1) actual knowledge of the information, (2) deliberate ignorance of the truth or falsity of the information, or (3) reckless disregard of the truth or falsity of the information. Congressional Research Service https://crsreports.congress.gov LSB10978 CRS Legal Sidebar Prepared for Members and Committees of Congress

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