The Supreme Court decided a pair of False Claims Act cases last year that collectively expand both the corporate risks of FCA liability and the opportunities to defeat potential FCA litigation. In United States ex rel. Schutte v. SuperValu, the Court held that scienter under the FCA turns on the defendant's "subjective beliefs—not [on] what an objectively reasonable person may have known or believed." 598 U.S. 739, 749 (2023). In United States ex rel. Polansky v. Executive Health Resources, Inc., the Court reaffirmed the government's broad discretion to seek dismissal of FCA claims filed by relators where it concludes that qui tam litigation is not in the government's interest. 599 U.S. 419 (2023). Taken together, the cases underscore the importance of ensuring that companies who participate in federal programs giving rise to FCA exposure develop contemporaneous factual records that support their good-faith compliance, particularly when facing ambiguous legal requirements. That requires attention to both the internal record, as litigation will likely focus on whether non-privileged documentation reflects a sincere effort to comply, and the external record, as contemporaneous disclosure of the company's interpretation of ambiguous regulatory requirements to the government can help defeat any FCA claims that are made.
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Originally Published by ALM LAW.COM, 21 February 2024
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