False Claims Act Knowledge Standard Upheld in SCOTUS SuperValu Decision
The Supreme Court issued its ruling in United States ex rel. Shutte v. Supervalu, Inc. today and unanimously upheld the knowledge standard in False Claims Act cases. In this highly anticipated case, the Court rejected the Seventh Circuit’s holding that a defendant who knew it was acting illegally was not liable under the False Claims Act if it could demonstrate that a fictitious reasonable person could have thought its actions were legal.
The Seventh Circuit’s decision was highly criticized by False Claims Act attorneys as inviting individuals and businesses to commit fraud and then come up with after-the-fact justifications that allow them to evade liability. In overturning the Seventh Circuit, the Court restored common sense to the False Claims Act’s knowledge requirement: under the False Claims Act, knowledge refers to defendants’ knowledge and subjective beliefs—not to what a hypothetical objectively reasonable person may have known or believed.
Read the SuperValu decision here.