George B. Breen, Member of the Firm in the Health Care & Life Sciences and Litigation practices and Chair of the firm’s National Health Care & Life Sciences Practice Steering Committee, in the firm’s Washington, DC, office, was quoted in Law360, in “Justices Ignite FCA Debate: Fairness vs. 'Invitation to Fraud,'” by Jeff Overley and Daniel Wilson. (Read the full version – subscription required.)
Following is an excerpt:
A U.S. Supreme Court showdown over False Claims Act punishment for commonplace regulatory violations carries "great importance" for fraud enforcement and is likely to spark congressional and administrative responses if justices severely weaken the powerful law, attorneys say.
The showdown officially began when the high court on Friday accepted two petitions in cases accusing retailers SuperValu Inc. and Safeway Inc. of overcharging Medicare and Medicaid for generic drugs. In each case, the Seventh Circuit issued 2-1 decisions rejecting FCA liability because the supermarket giants had adopted incorrect yet "objectively reasonable" interpretations of ambiguous regulations, and they were not warned away by "authoritative guidance" to the contrary.
Oral arguments are likely to take place in April, and a Supreme Court ruling is expected by late June; the lead case is known as Schutte v. SuperValu, where the plaintiff's surname is pronounced "SHOO-tee."
After the case is decided, the vast realm of FCA litigation could be reshaped by new standards for scienter, or knowledge of wrongdoing. FCA liability only attaches to billing errors that occur knowingly — defined as "actual knowledge," "deliberate ignorance" or "reckless disregard" — and the existence of knowledge is frequently a pivotal issue in fraud cases. …
Defense Bar Bristles at 'Highly Complicated' Rules
For attorneys who represent FCA defendants, the central issue in the case is a matter of fairness. They recoil at the idea of FCA punishment — including triple damages and maximum penalties of roughly $25,000 for every individual instance of faulty billing — tied to reasonable readings of unclear compliance obligations.
"Many FCA cases are premised on highly complicated regulations," and a purported "violation of an ambiguous law or regulation is not the same as 'knowingly' committing fraud against the government," Epstein Becker Green member George B. Breen told Law360.
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