U.S., ex rel. Schutte v. SuperValu Inc. (21-1326)
argument 21-1326U.S., ex rel. Schutte v. SuperValu Inc.
Supreme Court of the United States
1h 12m
8 speakers
8 chapters
transcribed 8 days ago
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What is the False Claims Act’s three‑part test for scienter that the Court discusses?
We'll hear argument next in Case 21-1326, United States X-Rail Shooty v. Super Value, Inc., and the Consolidated
Case.
Mr. Singh.
Mr. Chief Justice, and may it please the Court, the False Claims Act establishes three independent ways to prove CN Turk. for a defendant who presented legally false claims. First, if the defendant correctly interpreted the law and then chose to break it, that's actual knowledge. Second, if the defendant didn't bother to honestly assess what the law required before improperly presenting claims or presented claims as if they were definitely true despite knowing that they might well be false, that's either deliberate ignorance or recklessness. And third, a defendant may have adopted an interpretation of the requirement that was so unreasonable as to be objectively reckless. On the other hand, if the defendant attempted to discern and follow the correct interpretation of the law and was transparent with the government about how it resolved ambiguities, there is no see-enter.
This rule is not easy for plaintiffs, but it is a fair rule that follows the plain meaning of the text, tracks more than a century of the common law of fraud, and achieves the fundamental purpose of see-enter, which is to accurately separate culpable mindsets from innocent ones. Respondent's rule, by contrast, holds that contemporaneous center can be negated retroactively if the defendant's conduct falls within a wrong but reasonable interpretation of the law. It treats the defendant's subjective beliefs about the lawfulness of its conduct as irrelevant. This would permit some of the worst offenders to escape liability. Indeed, respondents would allow a defendant who presented false claims to admit that he wanted to break the law and yet simultaneously deny that he acted with Sienter.
That outcome alone shows how extreme their rule is and ought to discredit it. But the problems don't stop there. Across the board, respondents would replace existing incentives for companies to determine and then follow the law with an incentive to plunder every ambiguity for all it's worth. That flies in the face of the statute's text, the common law, and common sense. I welcome the court's questions.
Mr. Singh, if there was no guidance as to what usual and customary meant, do you think that the respondent here could also be accused of having made false statements if there was no guidance whatsoever as to what it meant?
Yes, Your Honor. I do think that the words themselves have a meaning, usually
customary. So what would you say it is?
So I think at a very minimum, if you had to find the sort of irreducible core of it, it's the price you're normally charging to cash customers. That's how it's always been understood since it was enacted, and to a majority of the cash customers. And so if you're charging a price only to a small fraction of cash customers, I think calling it your usual and customary price has always been understood to be a false statement.
What if you could show that in Nebraska, which is a part of this, it was read one way, but in Iowa it was read another way, and there was still no guidance, or disparate ways in different places? Sure. Would you still say that you could find that these statements were false or representations were false?
Yes, Your Honor. I think that falsity is generally understood in an objective sense. That is, a statement either is true or is false. Now, it may be the case that usual and customary is interpreted different ways in different states by their Medicaid programs. And so the same practice. may be okay in one state and not okay in another. That's a possibility. But what I would say is, even when you have, let's just take a slightly different example. Let's say that there are different courts that interpret a statute a couple different ways. One is right and one is wrong. There's a true one and a false one. The next question, which is really what's before the court, is about can it be knowingly false? And there we think the answer turns on subjective beliefs.
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Chapters
8 chapters
1
What is the False Claims Act’s three‑part test for scienter that the Court discusses?
0:01–8:36
2
How do the parties define “usual and customary price” and why does it matter for liability?
8:36–15:48
3
What hypothetical scenarios do the Justices use to explore actual knowledge versus reckless disregard?
15:48–22:47
4
Why does the Seventh Circuit’s rule on subjective belief versus objective reasonableness raise concerns?
22:47–33:28
5
How does the government argue that subjective intent should still be relevant under the FCA?
33:28–41:45
6
What role do industry guidance and internal communications play in determining scienter?
41:45–52:22
7
How might the Court’s decision affect future False Claims Act enforcement against businesses?
52:22–1:02:21
8
What final question does the Court pose about applying a single subjective standard to both law and fact issues?
1:02:21–1:12:19