Supreme Court Rejects Objective Standard for Scienter for False Claims Act

On June 1, 2023, the United States Supreme Court decided two consolidated cases, United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway, 589 U.S. ___ (2023), holding that a defendant’s subjective belief about the falsity of its claims at the time the claim is presented is the basis for determining whether the plaintiff has proved scienter under the False Claims Act (“FCA”). The Court rejected the Seventh Circuit’s so-called “objective” intent standard (which had been endorsed by the Eighth and D.C. Circuits) under which a defendant does not have the requisite scienter under the FCA so long as its position was supported by an objectively reasonable interpretation of the law, regardless of its actual knowledge or intent. Writing for a unanimous court, Justice Thomas explained that scienter “refers to [a defendant’s] knowledge and subjective beliefs—not to what an objectively reasonable person may have known or believed.” Slip Op. 8.

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