On April 18, 2023, the U.S. Supreme Court heard oral argument in the consolidated cases of U.S. ex rel. Schutte v. SuperValu and U.S. ex rel. Proctor v. Safeway Inc. The Court was asked to review the scienter standard for False Claims Act (FCA) cases. The justices' commentary during oral argument, discussed below, suggests that even in the face of an objectively reasonable interpretation of the applicable law, and the lack of any contrary authoritative guidance to that interpretation, a party's subjective understanding of its conduct may still matter.

Background on the cases at issue

In U.S. ex rel. Schutte v. SuperValu, the relator alleged that the defendants, a group of retail pharmacies, charged Medicare Part D and Medicaid programs their retail cash prices as their "usual and customary" prices for drugs rather than the prices offered through competitor price-match discount programs. The U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of the complaint, holding that the defendants' interpretation of the law at issue was objectively reasonable, without any contrary authoritative guidance, so the defendants could not be shown to have acted "knowingly" as required under the FCA.