Yesterday, the Supreme Court issued a joint opinion in the SuperValu and Safeway cases, unanimously holding that the scienter element of the False Claims Act (“FCA”) refers to a defendant’s knowledge and subjective beliefs rather than what an objectively reasonable person may have known or believed. This ruling reversed the lower court’s decision, holding that the defendants could not have acted with knowledge of the claim’s falsity if their actions were consistent with an objectively reasonable interpretation. The Supreme Court found that the FCA’s broad three-part definition of “knowingly,” which includes having actual knowledge, acting in deliberate ignorance of the truth or falsity of the information, or acting in reckless disregard of the truth or falsity of the information, tracked the traditional common law scienter requirement for claims of fraud.
What does this mean?
For whistleblowers, it’s great. They can come forward with allegations that a medical provider was aware of at least a substantial risk that the claims he or she submitted are false and survive a motion to dismiss. Prior to the SuperValu and Safeway opinion, whistleblowers feared that defense lawyers would defeat their claims by cleverly crafting post-hoc objectively reasonable interpretations to help a client avoid liability under the FCA.
Conversely, it’s not good for providers. Objectively reasonable interpretations won’t fly if and when the Government has evidence to show that a provider had awareness of at least a substantial risk that the claims are false. FCA liability includes treble damages – usually 3 times the loss to the Government – as well as significant penalties per false claim.
To avoid FCA liability, providers must understand the complex billing and healthcare laws so that they can be compliant. Educating staff, regularly reviewing and updating policies and procedures, and seeking legal advice from experienced healthcare attorneys are a few ways that providers can avoid FCA liability.
How Frier Levitt Can Help
Frier Levitt defends pharmacies, pharmacists, medical providers, and medical practices in government investigations and against whistleblower allegations. The firm also helps clients avoid risky behavior that is subject to government scrutiny. We develop compliance plans and propose conservative arrangements consistent with the complex web of healthcare law. Take proactive measures and contact Frier Levitt to speak with an experienced healthcare attorney for more information.
