SCOTUS Rejects Defense-Friendly Scienter Standard In Schutte Opinion

On June 1, 2023, the Supreme Court of the United States (SCOTUS) issued its much-anticipated opinion in United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway, Inc. (Schutte), holding that a defendant's subjective understanding of an ambiguous law, even if objectively reasonable, is relevant in proving scienter under the False Claims Act (FCA). The opinion, which was unanimous and authored by Justice Thomas, is not surprising given the questions and comments from the justices during the oral argument. Although SCOTUS framed the issue under review in Schutte in narrow terms, the opinion is likely to have broad implications for future cases brought under the FCA, especially those based on alleged violations of ambiguous laws.