Supreme Court Holds FCA Liability Hinges on Defendants’ Subjective Beliefs as to Falsity

The Court unanimously held that a defendant’s subjective belief is relevant to scienter under the False Claims Act, even when a defendant’s conduct is consistent with an objectively reasonable interpretation of the law.

On June 1, 2023, the US Supreme Court issued a decision in U.S. ex. rel. Schutte v. SuperValu Inc., holding that the scienter requirement of the False Claims Act (FCA) must account for defendants’ subjective beliefs as to the falsity of their claims regardless of what an objectively reasonable person may have believed. In a unanimous opinion authored by Justice Clarence Thomas, the Court overturned two Seventh Circuit decisions holding that the respondent-pharmacies’ subjective beliefs as to the falsity of claims submitted to government healthcare programs were irrelevant if their understanding was consistent with an objectively reasonable interpretation of the relevant law.

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