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June 13, 2023 By Staff

High Court False Claims Ruling Underscores Communication Is Key

Federal contractors should avoid taking unjustifiable risks when interpreting regulations—and then submitting bills to the US government— if they want to stay out of False Claims Act trouble.

That’s one of the takeaways from Justice Clarence Thomas’ June 1 opinion in United States ex rel. Schutte v. SuperValu Inc., which reinstated FCA suits alleging the SuperValu and Safeway Inc. grocery chains overcharged Medicare and Medicaid for prescription drugs.

The unanimous opinion had law firms that represent FCA defendants sending out client alerts, saying to prepare for less success in motions to dismiss. But the opinion doesn’t appear to be a pro-plaintiff game-changer beyond being a reprieve from what would have been a devastating defeat for those that try to uncover fraud, attorneys told Bloomberg Law.

This is “going to generally be a fact question that isn’t susceptible to a resolution on a motion to dismiss,” said Reuben A. Guttman of Guttman, Buschner & Brooks PLLC, a firm that represents whistleblowers.

But “I don’t think the opinion changed the rules of the game” for litigating FCA cases. “The opinion is true to the statute and consistent with the common law of fraud,” he said.

The dual cases arrived from the US Court of Appeals for the Seventh Circuit, which had rejected the two suits for lack of scienter because SuperValu Inc. and Safeway had offered a reasonable regulatory interpretation. And the companies had unsuccessfully urged the Supreme Court to find that intent must be lacking if their interpretation of an ambiguous rule was objectively reasonable.

Writing for a unanimous court, Thomas said the Seventh Circuit improperly failed to consider evidence of subjective intent—that the companies believed they were wrongly seeking payments from the government.

Read the entire article here: https://news.bloombergtax.com/financial-accounting/high-court-false-claims-ruling-underscores-communication-is-key

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  • rguttmanReuben A. Guttman
    Senior Founding Partner


    (202) 800-3002
    rguttman@gbblegal.com

    Practice Areas
    Consumer Law
    Complex Litigation
    Complex Employment and Labor
    Civil Rights

    Education
    Emory Law School (J.D., 1985)
    University of Rochester (BA, 1981)

    Admissions
    The State of Georgia
    The District of Columbia
    The Commonwealth of Pennsylvania
    The State of New Jersey
    The Supreme Court of the United States
    The United States District Courts for the
    - District of Columbia
    - District of New Jersey
    - District of Nebraska
    - Northern District of Georgia
    - District of Maryland
    - Western District of Michigan
    -Eastern District of Pennsylvania
    The United States Courts of Appeal for the
    - Third Circuit
    - Fourth Circuit
    - D.C. Circuit.

    Boards/Memberships
    Fellow of the American Bar Foundation

     

    American Bar Association Fellows
     

    Reuben A. Guttman
    Rated by Super Lawyers


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On Demand CLE: Reuben Guttman, and Professor JC Lore present CLE covering topics in their book, Pretrial Advocacy, Wolters Kluwer-NITA (2021).”
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