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What Is “Knowing” under the FCA? Supreme Court to Consider Impact of Ambiguous Regulations

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A successful False Claims Act (“FCA”) claim must show that the defendant submitted a false claim or statement “knowingly.” The “knowing” element—the scienter prong—depends on whether the defendant actually knew that the claim or statement was incorrect, or recklessly disregarded the facts or legal requirements that rendered the claim “false.” But, of course, government regulations, contract terms, and grant requirements can be incredibly complex and difficult to understand. When the ground rules are unclear, how does a company “know” that its claims for payment may be false under the FCA?

What does the FCA say about “knowing”?

The FCA defines “knowing” as (1) having “actual knowledge of the information;” (2) acting “in deliberate ignorance of the truth or falsity of the information;” or (3) acting “in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b). A “specific intent to defraud” is not required for liability under the FCA. 

What if the law is not clear?

Companies doing business with the government have a duty to familiarize themselves with the laws, regulations, and contract terms applicable to that relationship. Where laws or regulations are unclear, an agency often will provide guidance in the form of rulemakings (regulations) or official policy announcements. 

Judicial interpretations of ambiguous laws can also provide insight into the proper meaning. A court’s interpretation of a statute or regulation may be sufficient to warn contractors how the government will construe a law. Less reliable insights might come from agency publications or policy pronouncements, industry practices, or expert analyses regarding the interpretation of an ambiguous term.

All of these sources can be helpful to a company trying to be compliant and assess its risks. But, if no “authoritative guidance” exists from the government itself, can a defendant truly be “reckless” about its compliance with an ambiguous term or provision? This is the question the Supreme Court will address during its 2023 term in United States ex rel. Schutte v. SuperValu, Inc.

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