U.S. Supreme Court To Determine Scienter Standard For False Claims Act Cases

As previewed in a prior Jones Day Commentary, the U.S. Supreme Court has now granted certiorari to address the standard for scienter in False Claims Act ("FCA") cases. The Court consolidated and will review two Seventh Circuit cases, U.S. ex rel. Schutte v. SuperValu, Inc., and U.S. ex rel. Proctor v. Safeway, Inc., to consider whether a defendant whose conduct comported with an "objectively reasonable" interpretation of the law can nonetheless be found to have "knowingly" broken the law and thus submitted false claims. The question is critical to all who do business with the government, and particularly health care providers subject to regulations that are often ambiguous. Private FCA plaintiffs (called "relators") frequently have leveraged such ambiguities to threaten treble damages and massive civil penalties for, at most, good faith practices.