Helmer Martins Tate & Garrett Co., LPA is thrilled to announce that it has obtained a landmark decision in two False Claims Act cases—United States, et al., ex rel. Schutte, et al. v. SuperValu Inc., et al. (Case No. 21-1326) and United States, et al., ex rel. Proctor v. Safeway, Inc. (Case No. 22-111)—that were consolidated for argument before the United States Supreme Court.

On June 1, 2023, the Supreme Court announced its unanimous decision. The question presented to the Court was whether and when a defendant’s contemporaneous subjective understanding or beliefs about the lawfulness of its conduct are relevant to the False Claims Act’s scienter element—meaning the state of mind necessary to impose civil liability under the statute.  Justice Thomas, writing for the unanimous Court, held that the scienter element refers to a defendant’s knowledge and subjective beliefs, and not what an objectively reasonable person may have known or believed.

In so deciding, the Court vanquished the so-called “Safeco defense” (based on a footnote from a non-False Claims Act Supreme Court decision) argued by many FCA defendants across the country, which had allowed even the most brazen of fraudsters to escape liability based on post-hoc rationalizations.  Relying upon Safeco, defendants like the retail pharmacies in our cases had argued that they could not “knowingly” defraud the United States government if their conduct was objectively reasonable and there was no specific guidance telling them it was improper.  The Court rejected this defense, and sensibly concluded that what matters is what a defendant knew or believed at the time it submitted the false claims.

“The SuperValu decision has enormous implications for the False Claims Act and the American taxpayer,” says James A. Tate. “The so-called Safeco defense has been a grave and growing threat to the False Claims Act for more than a decade. Whistleblowers and their partners in the Government need not worry about it any longer. Common sense prevailed. The SuperValu court made it clear that the culpability of fraudsters is measured by what they knew and thought at the time; ‘reasonable interpretations’ conjured up by clever defense counsel years later are irrelevant, as they should be.”

“This decision unanimously, decisively, and conclusively vindicates arguments that our firm has made cases across the country about the standard for establish ‘knowing’ violation of the False Claims Act. We are excited for the opportunity to vindicate our tenacious clients in these long-running, hard-fought cases too. They should be proud of the lasting impact the SuperValu decision will have on their fellow fraud-fighters. We commend them for their courage, and appreciate the trust they placed in us to advocate for them in the highest court in the land.”

The decision in SuperValu will have an immediate impact on False Claims Act litigation around the country.  The decision reinforces the strength of the government’s primary antifraud law.  Since the 1986 amendments to the False Claims Act, the statute has helped recover over $72 billion from money lost to fraudulent government contractors.  In particular, the SuperValu decision will have a significant impact in healthcare fraud cases, where the United States spends billions of dollars each year through Medicare and Medicaid.

For our clients, the SuperValu decision paves the way for the Relators to present their cases to a jury.  That result was never guaranteed after the lower courts had dismissed the Relators’ cases based on the Safeco defense.  But our firm fought tirelessly to get the erroneous dismissals vacated.

“Our law firm has always been on the front lines of False Claims Act litigation as these cases demonstrate,” says B. Nathaniel Garrett.  “Since 1984, we have represented qui tam whistleblowers across the United States at all levels of federal court.  We’ve now had three cases heard by the United States Supreme Court with smashing results.  We are a small but mighty False Claims Act boutique that will relentlessly pursue fraud cases on behalf of whistleblowers anywhere.”

Oral argument in the case was held on April 18, 2023 in Washington D.C.  The HMTG team was present for the argument.  HMTG attorneys  James A. Tate, Paul B. Martins, and Julie W. Popham represent the Relators, alongside their long-time collaborators Timothy Keller, Gary Grossenbacher, Glenn Grossenbacher, Jason Idell, Rand Riklin, and Dale Aschemann.  Tejinder Singh argued the case for the Relators in the Supreme Court.

About Helmer Martins Tate & Garrett Co., LPA

Helmer Martins Tate & Garrett Co., LPA has prosecuted False Claims Act cases on behalf of whistleblowers longer than any law firm in America.  Since 1984, we have lectured, authored treatises, written articles, litigated, and lobbied for the rights of whistleblowers who come forward to protect the public treasury.  Our cases have been featured in the Wall Street Journal, the New York Times, and on the television show, 60 Minutes.  Our lawyers are repeatedly recognized by organizations such as Best Lawyers in America, the National Law Journal, Super Lawyers, US News and World Report, and The Anti-Fraud Coalition.  Collectively, our False Claims Act cases have recovered more than $1 billion.

Although the chances of having a case selected by the Supreme Court are exceedingly low, HMTG’s lawyers have represented clients in three False Claims Act cases in front of the United States Supreme Court over the last 15 years. In 2008, our firm argued Allison Engine Co., Inc. v. United States ex rel. Sanders.  That case was ultimately resolved in our clients’ favor with our clients receiving the maximum relator share permitted under the statute (read more).

To report fraud against the Federal or State governments, please contact us for a free, confidential consultation.

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