False Claims Act: Circuit Court Questionably Construes Scienter Requirement

In Short

The Situation: The U.S. Court of Appeals for the Eleventh Circuit held that the False Claims Act's ("FCA") intent requirement can be met even if the underlying regulation that the defendant allegedly violated is ambiguous.

The Result: The Eleventh Circuit adopted an approach that could conflict with other courts' treatment of the FCA's intent requirement. 

Looking Ahead: In our view, the ruling is inconsistent with the FCA's requirement that a defendant act "knowingly" and with case precedent. 

The U.S. Court of Appeals for the Eleventh Circuit recently issued an opinion addressing the False Claims Act's intent requirement. U.S. ex rel. Phalp v. Lincare Holdings, Inc., No. 16-10532, ___ F.3d ___ (11th Cir. May 26, 2017). In our view, the Eleventh Circuit adopted the wrong approach, although correctly ruling for the defendant.