Washington, DC, January 17, 2023—On Friday, the Supreme Court granted certiorari to address an issue central to the enforcement of the False Claims Act, the government’s primary tool for fighting fraud against the U.S. Treasury.
Statement of Claire Sylvia, partner and whistleblower attorney at Phillips and Cohen:
“In two decisions, panels of the Seventh Circuit held over strong dissents that a person does not act with a culpable mental state if they had an ‘objectively reasonable’ interpretation of an ambiguous legal requirement and ‘authoritative guidance’ did not alert them that their interpretation was incorrect. Critically, those decisions held that in that circumstance subjective bad faith was irrelevant, even though the False Claims Act expressly provides that ‘actual knowledge’ can lead to liability. As the dissent pointed out, fraud is an intentional wrong: ‘Subjective intent distinguishes fraud from the proverbial garden-variety’ breach of contract.’ ”
Statement of Colette Matzzie, partner and whistleblower attorney at Phillips and Cohen:
“The Supreme Court’s decision to take these cases will provide it an opportunity to clarify the relevance of its own decisions in Safeco Insurance and Halo Electronics which involved other statutory schemes, and which have formed part of the debate over when a person can be held liable for knowing violations of law.”
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