WASHINGTON, June 1, 2023 (Reuters) – The U.S. Supreme Court on Thursday gave a boost to whistleblowers in their bid to revive lawsuits accusing pharmacy operators of knowingly overbilling government health insurance programs for prescription drugs at taxpayers’ expense
The justices in a 9-0 decision threw out a lower court’s ruling that said the pharmacies could not be held responsible for fraud in whistleblower cases pursued against Safeway Inc, owned by Albertsons Companies Inc (ACI.N), and SuperValu Inc, part of United Natural Foods Inc (UNFI.N).
At issue was whether companies can avoid liability for fraud by showing that an “objectively reasonable” reading of the law supported their conduct – regardless of whether they truly believed that interpretation at the time of their alleged wrongdoing.
The litigation was filed under a law called the False Claims Act (FCA) that lets individuals sue on behalf of the U.S. government when they have evidence of fraud against federal programs.
The whistleblowers, seeking monetary damages, accused the companies of offering prescription drugs at discounted prices to most customers paying out of pocket, while improperly charging higher rates to the government. Government healthcare programs reimburse pharmacies for dispensing covered drugs to beneficiaries.
Conservative Justice Clarence Thomas, who wrote the ruling, said of the intent requirement that “what matters for an FCA case is whether the defendant knew the claim was false,” adding that “it does not matter whether some other, objectively reasonable interpretation” exists.
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