In an expert opinion published by Corporate Counsel, Partners Ronald Machen and Christopher Babbitt and Senior Associates Carrie Montgomery and Nathaniel Reisinger discuss the Supreme Court decisions in two False Claims Act cases in 2023, SuperValu and Polansky, that collectively expand both the corporate risks of FCA liability and the opportunities to defeat potential FCA litigation. The authors provide recommendations to companies participating in any government programs facing meaningful FCA exposure, particularly in establishing a scienter defense after SuperValu without waiving privilege and making the case for dismissal after Polansky.
Excerpt: “Defendants can no longer rely on a regulatory requirement’s “facial ambiguity alone” to preclude a finding that they knew their claims were false, nor can they point to objectively reasonable “post hoc interpretations” of the requirement. Id. at 749, 752. Instead, litigation over the FCA’s scienter requirement will turn on what the defendants actually believed when presenting the claim. Yet when liability turns on the contemporaneous knowledge of ambiguous regulatory requirements, the relevant record could easily implicate privileged communications with counsel; at the same time, non-privileged communications could indicate awareness of an important regulatory ambiguity without any corresponding effort to resolve it.”
