United States ex rel. Schutte v. SuperValu, Inc.

The False Claims Act's scienter element refers to the subjective knowledge of the accused, not to the knowledge of an objective reasonable person. Even if a term is facially ambiguous, “either actual knowledge, deliberate ignorance, or recklessness will suffice” to establish knowledge. Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U. S. 176, 187 (2016). 

Petitioners brought suit under the False Claims Act (FCA), alleging that Defendants violated the act when they overcharged Medicaid and Medicare for reimbursement. The FCA applies when Defendants “knowingly presen[t] . . . a false or fraudulent claim for payment or approval” to the Government. §3729(a)(1)(A). The Seventh Circuit held that Defendants were not liable under the scienter requirement, and Petitioners assigned error to the grant of summary judgment. 

Petitioners argue that reimbursement requests submitted to the Government must be for the “usual and customary” price that the Defendant charges, and that through a discount program the Defendants had effectively reduced their “usual and customary” price substantially while continuing to request reimbursement of the full retail price. 

Defendants argue the phrase “usual and customary” is ambiguous. Defendants admit that they had subjective knowledge that “usual and customary” was intended to refer to the price actually charged, but that the Court should nonetheless construe “knowingly” to be what an objectively reasonable person may have believed. 

The Court held that the FCA’s scienter element refers to respondents’ subjective knowledge, and that even if “usual and customary” is facially ambiguous, “either actual knowledge, deliberate ignorance, or recklessness will suffice” to establish knowledge. Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U. S. 176, 187 (2016). 

VACATED AND REMANDED.