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.
