News Briefs: SCOTUS Sides With Gov’t in Fraud Liability Case

In a case closely watched by the health insurance industry, US ex rel. Schutte v. SuperValu, Inc., the Supreme Court on June 1 reversed an appeals court decision that would have hobbled the government’s use of the False Claims Act (FCA) to pursue fraud cases. The SuperValu case — which was consolidated with another whistleblower case, U.S. ex rel. Proctor v. Safeway, Inc. — concerned whether the two pharmacy/grocery chains knowingly filched the U.S. government by “usual and customary” prices for prescription drugs that failed to account for various discount programs. The Seventh Circuit Court of Appeals previously ruled that the companies aren’t liable under the FCA because they could prove they made an “objectively reasonable” interpretation of an ambiguous statute, regardless of whether they intended to commit fraud. But in a unanimous Supreme Court opinion, Justice Clarence Thomas wrote that FCA liability instead should hinge on “what the defendant thought when submitting the false claim — not what the defendant may have thought after submitting it.” In an amicus brief submitted in April, AHIP and the American Hospital Association warned that a ruling in favor of the government’s position in the cases would “create a Wild West of ramifications for any well-intentioned and legitimate hospital or insurance provider that seeks to serve Americans in partnership with the government.”

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