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 Bloomberg Law, in “Supreme Court Reopens Fraud Suits Against SuperValu, Safeway,” by Daniel Seiden.

Following is an excerpt:

The US Supreme Court on Thursday revived two False Claims Act suits filed by whistleblowers alleging that SuperValu Inc. and Safeway Inc. overcharged the government for prescription drugs.

The US Court of Appeals for the Seventh Circuit had rejected the suits for lack of scienter because their pricing arose from a reasonable regulatory interpretation. But the appeals court improperly failed to consider evidence of subjective intent, that the companies believed they were wrongly seeking payments from the government, the Supreme Court said.

The FCA’s scienter element refers to a defendant’s knowledge and subjective beliefs, not what an objectively reasonable person may have known or believed, Justice Clarence Thomas wrote in a unanimous opinion.

The companies are accused of telling Medicaid and Medicare that they sought reimbursement at their “usual and customary” price for the drugs, even as retail customers paid less.

Whistleblowers may establish scienter by showing that the companies actually knew their prices weren’t their usual and customary prices when they reported them; were aware of a substantial risk that their higher, retail prices weren’t their usual and customary prices and intentionally avoided learning whether their reports were accurate; or were aware of such a substantial and unjustifiable risk but submitted the claims anyway, the opinion said.

If the whistleblowers “can make that showing, then it does not matter whether some other, objectively reasonable interpretation of ‘usual and customary’ would point to respondents’ higher prices,” the court said. …

More Cases

“Unfortunately for future defendants, this ruling suggests that efforts to seek the early dismissal of cases on the basis of lack of scienter may become more challenging,” requiring protracted and expensive discovery, said George Breen, who represents FCA defendants with Epstein Becker & Green PC in Washington, D.C.

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