Supreme Court Reopens Fraud Suits Against SuperValu, Safeway

Adam Braverman spoke to Bloomberg Law about the U.S. Supreme Court reviving two False Claims Act (FCA) suits filed by whistleblowers alleging that SuperValu Inc. and Safeway Inc. overcharged the government for prescription drugs.

The U.S. 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 according to the Supreme Court’s opinion, the appeals court improperly failed to consider evidence of subjective intent, that the companies believed they were wrongly seeking payments from the government, and 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.

“We would expect to see more FCA cases enter into the fact discovery stage to determine whether defendants believed their claims were not accurate,” said Adam, who noted that many FCA practitioners expected this outcome. “This would include depositions and examination of e-mails and correspondence of decision-makers.”

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