What does it mean to “knowingly” submit a false claim under the False Claims Act?

The False Claims Act (FCA) has a three-part definition of “knowing” and “knowingly.”  That definition includes (1) having “actual knowledge” of a claim’s falsity; (2) acting in “deliberate ignorance” of its truth or falsity; or (3) acting with “reckless disregard.”  Individuals can act “knowingly” even if they do not have “specific intent to defraud.” 

Determining whether a company or individual “knowingly” submits a false claim can be difficult, particularly when the statutes and regulations governing an industry are complex. 

On one hand, companies have a general duty to familiarize themselves with applicable laws in their industry.  But on the other hand, regulations can be ambiguous, and the government may not provide authoritative guidance for the particular circumstances under consideration. 

The U.S. Supreme Court addressed the definition of “knowingly” in United States ex rel. Schutte v. SuperValu.  The Court held that the FCA requires consideration of not only whether a defendant had an objectively reasonable interpretation of applicable statutes and regulations, but also whether the defendant subjectively believed its interpretation was correct. 

So, if a defendant submits a claim for payment based on one reasonable interpretation of a statute or regulation, but believes that the government has adopted a contrary interpretation, that submission is “knowingly” false under the FCA.  

The SuperValu decision also offered guidance on what “reckless disregard” means.  The phrase captures defendants who are conscious of a “substantial and unjustifiable risk” that their claims are false, or alternatively, face a “high risk of illegality that was so obvious that it should have been known.” 

That definition could apply, for example, if a company’s quality control division repeatedly advises it that it has submitted a large number of mistaken claims for payment to the government.

Finally, the SuperValu decision is notable for its emphasis on common law.  The Court observed that the “text of the FCA tracks the common law.”  As a practical matter, that means that the definition of “knowing” may depend on historical understandings of what constitutes fraud. 

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