{"id":17221,"date":"2023-06-07T13:08:06","date_gmt":"2023-06-07T13:08:06","guid":{"rendered":"https:\/\/nicholsbrar.com\/?p=17221"},"modified":"2023-06-07T16:15:23","modified_gmt":"2023-06-07T16:15:23","slug":"bad-intentions-supreme-court-holds-that-subjective-belief-controls-in-determining-knowledge-under-false-claims-act","status":"publish","type":"post","link":"https:\/\/nicholsbrar.com\/bad-intentions-supreme-court-holds-that-subjective-belief-controls-in-determining-knowledge-under-false-claims-act\/","title":{"rendered":"Bad Intentions:\u00a0Supreme Court Holds That Subjective Belief Controls in Determining Knowledge Under\u00a0False Claims Act"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"17221\" class=\"elementor elementor-17221\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"has_ae_slider elementor-section elementor-top-section elementor-element elementor-element-2d619ceb elementor-section-boxed elementor-section-height-default elementor-section-height-default ae-bg-gallery-type-default sc_fly_static\" data-id=\"2d619ceb\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-extended\">\n\t\t\t\t\t<div class=\"has_ae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-4f299c80 sc_inner_width_none sc_content_align_inherit sc_layouts_column_icons_position_left ae-bg-gallery-type-default sc_fly_static\" data-id=\"4f299c80\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-73b45f2b sc_fly_static elementor-widget elementor-widget-text-editor\" data-id=\"73b45f2b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p class=\"x_MsoNormal\"><span data-ogsc=\"black\">A confusing or ambiguous statute is no longer a defense when actors know they are submitting false claims for payment to the federal government.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">In the consolidated qui tam cases of\u00a0<i data-ogsc=\"\">United States ex rel. Schutte v. SuperValu Inc<\/i>. and\u00a0<i data-ogsc=\"\">United States ex rel. Proctor v. Safeway Inc<\/i>., the Supreme Court held last Thursday that the False Claims Act\u2019s knowledge element is based on defendant\u2019s subjective belief when submitting claims.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">The cases involved two pharmacies that allegedly violated the FCA by submitting claims to federal programs for covered drugs.\u00a0 The claims reported prescription-drug prices exceeding the pharmacies\u2019 \u201cusual and customary\u201d charges to the public. This increased the reimbursement amounts received from Medicare and Medicaid, which use a formula that considers a pharmacy\u2019s \u201cusual and customary\u201d charge to the public as a cap on reimbursement amounts.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">The whistleblowers alleged that the \u201cusual and customary\u201d charges reported by the pharmacies did not account for discount drug programs frequently offered to customers. They also offered evidence that the pharmacies knew they should have factored in the discount programs but submitted their claims anyway and sought to shield the discounts from regulators.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">The pharmacies argued that their subjective knowledge was irrelevant, and that it was objectively reasonable to interpret \u201cusual and customary\u201d as referring only to their non-discounted cash prices.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">The Seventh Circuit affirmed the district court\u2019s summary-judgment ruling in favor of the pharmacies, endorsing the \u201cobjectively reasonable\u201d standard adopted by other circuits and finding no FCA liability where a defendant\u2019s offered interpretation is objectively reasonable and no authoritative guidance instructs otherwise.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">As it turns out, the objective standard was the wrong one.\u00a0 The Supreme Court vacated the Seventh Circuit\u2019s decision, finding the FCA\u2019s \u201cknowledge\u201d element refers to a defendant\u2019s \u201cknowledge and subjective beliefs\u2014not to what an objectively reasonable person may have known or believed.\u201d Though the Court acknowledged the \u201cfacial ambiguity\u201d of the \u201cusual and customary\u201d requirement, it declined to consider post hoc \u201clegal interpretations that [defendants] did not believe or have reason to believe\u201d when submitting the false claims. \u201cIt is enough if [defendants] believed that their claims were not accurate\u201d because \u201cwhat matters for an FCA case is whether the defendant knew the claim was false.\u201d<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">Thus, knowledge under the FCA may be established by showing that the actor either (1) had actual knowledge that submitted claims were false\u00a0<i data-ogsc=\"\">or\u00a0<\/i>(2) knew of the substantial risk that submitted claims were false yet avoided learning the truth. The decision also affects enforcement of the Stark Law and Anti-Kickback Statute, two complicated statutory and regulatory schemes which often serve as the basis for FCA liability.\u00a0<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">Determining intent for FCA liability will now require a highly fact-intensive inquiry into an organization\u2019s subjective beliefs when submitting claims. All health care providers and other entities subject to FCA liability should closely monitor their internal communications regarding regulatory requirements going forward and ensure a uniform approach at all levels. Organizations should also strongly consider creating contemporaneous records regarding their interpretation of any ambiguous rules and regulations, which could be used to show a good-faith subjective belief.<\/span><\/p><p class=\"x_MsoNormal\"><span data-ogsc=\"black\">Please contact Nichols Brar Weitzner &amp; Thomas with any questions regarding how you can minimize your organization\u2019s FCA liability when faced with these complex regulations.\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>A confusing or ambiguous statute is no longer a defense when actors know they are submitting false claims for payment to the federal government. In the consolidated qui tam cases&hellip;<\/p>\n","protected":false},"author":7,"featured_media":17222,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bad Intentions:\u00a0Supreme Court Holds That Subjective Belief Controls in Determining Knowledge Under\u00a0False Claims Act - Nichols Brar Weitzner &amp; Thomas<\/title>\n<meta name=\"description\" content=\"One of NBWT&#039;s areas of expertise is pursuing reimbursements owed to its healthcare provider clients.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nicholsbrar.com\/bad-intentions-supreme-court-holds-that-subjective-belief-controls-in-determining-knowledge-under-false-claims-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bad Intentions:\u00a0Supreme Court Holds That Subjective Belief Controls in Determining Knowledge Under\u00a0False Claims Act - Nichols Brar Weitzner &amp; 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