FOLLOW US

(USA Herald) - FCA stands for False Claims Act, which is a federal law that allows private individuals, known as whistleblowers, to file lawsuits on behalf of the government against individuals or companies that have defrauded government programs. The law applies to any program that receives funding from the government, including healthcare programs like Medicare and Medicaid, defense contractors, and other government contractors.

FCA cases are often complex and can involve allegations of a wide range of fraudulent activities, such as billing for services or products that were never provided, submitting false claims for reimbursement, and providing kickbacks to physicians or other healthcare providers. Successful FCA cases can result in significant penalties, including treble damages and fines.

The cases are U.S. ex rel. Proctor v. Safeway Inc., and U.S. ex rel. Schutte et al. v. SuperValu Inc. et al., each in the Supreme Court of the United States.

Months before the US Supreme Court rules on the viability of False Claims Act cases involving murky compliance obligations, defense attorneys are quietly imploring the US Department of Justice not to bring such cases and publicly signaling confidence that a favorable ruling is forthcoming.

The exhortations from defense counsel are occurring behind the scenes when the DOJ is weighing whether to file suit or join sealed whistleblower cases against companies accused of compliance lapses and suspicious billing in taxpayer-funded programs.

It's a trend that started emerging even before the Supreme Court recently agreed to assess the Seventh Circuit's ruling that it "does not matter" whether someone intended to commit fraud, so long as billing reflected "objectively reasonable" views of ambiguous compliance duties and those views weren't foreclosed by authoritative guidance.

FCA defense lawyers have been making the ambiguity argument more frequently at the investigative stage and early in litigation. To the extent that defense counsel can concentrate on nebulous legislative language and vague regulatory provisions and worry less about presenting evidence of good-faith compliance efforts, they might find it easier to derail FCA investigations and litigation.

The central issue at the Supreme Court is whether the FCA is covered by Safeco Insurance Co. v. Burr, a 2007 case in which the high court shielded erroneous yet reasonable compliance views involving the Fair Credit Reporting Act. Several circuit courts have analyzed Safeco in the FCA context, and that lengthy history raises the question of why defense lawyers are suddenly emphasizing ambiguity with greater gusto.

It may be that the Seventh Circuit's ruling in Schutte v. SuperValu Inc. and its similar ruling in Proctor v. Safeway, which are also before the Supreme Court, made it abundantly clear that defense counsel could try to focus solely on ambiguity without worrying about also proving good intentions. The Seventh Circuit majority found that "nothing in the language of the FCA suggests that a defendant's subjective intent is relevant," prompting a dissent that bemoaned "a safe harbor for deliberate or reckless fraudsters whose lawyers can concoct a post hoc legal rationale that can pass a laugh test."

According to Samuel Lopez, a reporter for USA Herald, defense lawyers are increasingly relying on the ambiguity argument in False Claims Act cases. They argue that they should not be held liable for fraud if they had a good-faith belief that their actions were reasonable and if the law and regulations are unclear.

Defense lawyers argue that if the court shields erroneous yet reasonable compliance views, it will make it easier to derail FCA investigations and litigation. By concentrating on nebulous legislative language and vague regulatory provisions, they might find it easier to defend their clients.

The Supreme Court is set to rule on whether the FCA is covered by the Safeco Insurance Co. v. Burr case. Several circuit courts have analyzed Safeco in the FCA context, and that lengthy history raises the question of why defense lawyers are suddenly emphasizing ambiguity with greater gusto.

While some lawyers believe the ambiguity argument will be successful, others are more skeptical. Samuel Lopez, of USA Herald, noted that the Supreme Court's conservative justices tend to side with big business in close-call cases.