Supreme Court To Decide Significant Case On False Claims Act's Scienter Standard

On January 13, 2023, the Supreme Court granted certiorari in a pair of consolidated cases from the Seventh Circuit that could result in one of the most consequential False Claims Act (FCA) decisions since the FCA was amended in 1986. See U.S. ex rel. Schutte v. SuperValu Inc., No. 21-1326,and U.S. ex rel. Proctor v. Safeway, Inc., No. 22-111.

At issue is whether a defendant can act "knowingly" under the FCA when the relevant legal requirement for payment is ambiguous, and the defendant's interpretation is objectively reasonable—and whether scienter can be determined without a separate inquiry into the defendant's subjective intent at the time of the conduct in question. The question formally presented in the petitions 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."