The United States Supreme Court recently agreed to review two cases where the defendants were accused of knowingly making false claims or statements to the U.S. government. The defendants in separate cases U.S. ex rel. Schutte v. SuperValu, Inc. and U.S. ex rel. Proctor v. Safeway, Inc. (SuperValu and Safeway) were accused of violating the false claims act (FCA) in overbilling Medicare and Medicaid for prescription drugs. The businesses charged customers a lower price and kept the difference. This action led to qui tam whistleblower suits initiated by concerned parties outside the government.
The Circuit court ruling
The Seventh Circuit Court ruled that the defendants did overcharge the U.S. government, but they did so while operating under an “objectively reasonable” interpretation of the law. The Department of Justice and whistleblower advocates argued against this ruling and called upon the Supreme Court to review the case and reverse the verdict. Their concerns include:
- The defendants can do whatever they want in bad faith and then come up with an ad hoc reasonable explanation after the fact.
- The circuit courts are split on this issue, so a decision would help clear up the matter with a more definitive reading of the law.
Senator sends brief to the court
Senator Chuck Grassley of Iowa spearheaded a strengthening of the False Claims Act in 1986 and has been active in going after big pharma and keeping medication costs down. He joined Taxpayers Against Fraud and the Department of Justice in sending a brief to the high court asking for it to protect the law and its intent. In part, it reads:
“SuperValu’s radical departure from the statute continues a lamentable tradition of some courts interpreting the FCA in an unduly restrictive fashion, which Congress and this Court repeatedly have stepped in to correct. The Court should grant certiorari to repair this tear in the FCA. If it is not set right, it will not be long before the centerpiece of the government’s anti-fraud arsenal becomes unusable.”
Medicare and Medicaid fraud a significant issue
Not a week goes by when there is news of pharmacies, labs, doctors and medical professionals getting caught and fined or jailed for their attempts to overbill or scam Medicare and Medicaid. This ruling could go a long way towards protecting the False Claims Act and taxpayers’ money in other cases yet to come.