In a unanimous opinion, the Supreme Court in United States ex rel. Schutte v. SuperValu Inc., No. 21-111, 2023 WL 3742577 (U.S. June 1, 2023) found that liability in False Claims Act (FCA) suits depends on the defendants’ subjective beliefs and vacated two Seventh Circuit rulings that had found such knowledge never to be relevant. The Court noted that “[t]he FCA’s scienter element refers to [the defendants’] knowledge and subjective beliefs — not to what an objectively reasonable person may have known or believed.”
The framework the Seventh Circuit used would have meant FCA liability could not have been found as long as defendants identified an objectively reasonable interpretation of a statute or regulation after the fact.
The Supreme Court decision is available here.
