Image of What is "Scienter" Under the False Claims Act?

What is “Scienter” Under the False Claims Act?

Scienter Under the False Claims Act Does Not Require Proof of Specific Intent

An ordinary breach of a government contract caused by an honest mistake ordinarily does not give rise to False Claims Act liability.  To prevail in a qui tam action, a relator must prove the defendant acted knowingly, i.e., that the defendant

“(i) has actual knowledge of the information;

(ii) acts in deliberate ignorance of the truth or falsity of the information; or

(iii) acts in reckless disregard of the truth or falsity of the information.”

31 U.S.C. § 3729(b).  A False Claims Act relator is not required to prove specific intent to defraud. Therefore, a person who acts in deliberate ignorance or reckless disregard of a false or fraudulent claim can be liable under the False Claims Act.

As amended by the Fraud Enforcement and Recovery Act of 2009, a person is liable under the False Claims Act if he “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” There is no requirement to prove that a false statement was made with the intent that it would result in the federal government paying the claim.

Supreme Court Clarifies False Claims Act Scienter Standard in SuperValu

In United States ex rel. Schutte v. SuperValu, Inc., 143 S. Ct. 1391 (2023), the Supreme Court clarified that the knowledge analysis under the False Claims Act “refers to respondents’ knowledge and subjective beliefs—not to what an objectively reasonable person may have known or believed.”

  • “Actual knowledge” refers to what the defendant is aware of.
  • “Deliberate ignorance” encompasses defendants who are aware of a substantial risk that their statements are false, but intentionally avoid taking steps to confirm the statements’ truth or falsity.
  • “Reckless disregard” captures defendants who are conscious of a substantial and unjustifiable risk that their claims are false, but submit the claims anyway.

These forms of scienter track the common law of fraud, which generally focuses on the defendant’s lack of an honest belief in the statement’s truth.  The focus is on what a defendant thought when submitting a claim—not what a defendant may have thought after submitting it:  “As such, the focus is not, as respondents would have it, on post hoc interpretations that might have rendered their claims accurate. It is instead on what the defendant knew when presenting the claim.”

These briefs in the SuperValu appeal provide additional information about the correct scienter standard:

Senator Grassley’s amicus brief

Taxpayers Against Fraud Education Fund’s amicus brief

Solicitor General’s amicus brief

False Claims Act Qui Tam Relators Need Not Demonstrate Intent

The Department of Justice takes the position that qui tam relators need not prove intent.  In a Statement of Interest filed on September 19, 2017 in United States ex rel. Daniel Hamilton, Plaintiff, v. Yavapai Community College District, et al., CV-12-08193-PCT-GMS, the Department argued:

Despite defendants’ endorsement of an intent requirement, no such requirement exists. Instead, the FCA provides an action for “knowing” violations and defines “the terms ‘knowing’ and ‘knowingly’ [to] mean that a person, with respect to information has actual knowledge of this information; acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless disregard of the truth or falsity of the information; and require no proof of specific intent to defraud[.]” 31 U.S.C. § 3729(b)(1) (emphasis added). This is made clear not only by the FCA itself, but also by several Ninth Circuit cases. See Hooper v. Lockheed Martin Corp., 688 F.3d 1037, 1049 (9th Cir. 2012) (district court applied the wrong standard in requiring relator to show defendant acted with “the intent to deceive”); see also U.S. v. Bourseau, 531 F.3d 1159, 1167 (9th Cir. 2008); U.S. ex rel. Plumbers and Steamfitters Local Union No. 38 v. C.W. Roen Const. Co., 183 F.3d 1088, 1092-93 (9th Cir. 1999); U.S. ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991).

Experienced False Claims Act Qui Tam Whistleblower Attorneys

The experienced whistleblower attorneys at leading whistleblower law firm Zuckerman Law have substantial experience representing whistleblowers disclosing fraud and other wrongdoing at government contractors and grantees.  To schedule a free preliminary consultation, click here or call us at 202-262-8959.

Our experience includes:

  • Representing qui tam relators in False Claims Act actions concerning off-label marketing, false billing, and education loan fraud (inflating entitlement to interest rate subsidies).
  • Representing whistleblowers in NDAA retaliation claims before the Department of Defense, and Department of Homeland Security, Department of Justice Offices of Inspectors General.
  • Litigating False Claims Act retaliation cases.
  • Representing whistleblowers disclosing fraud on the government in Congressional investigations.
  • Training judges, senior Office of Inspector General officials, and federal law enforcement about whistleblower protections.

In addition, we have substantial experience representing whistleblowers under the Whistleblower Protection Act (WPA) and enforcing the WPA, the law that the NDAA whistleblower provisions are based upon.  Before hiring a lawyer for a high-stakes whistleblower case, assess the lawyer’s reputation, prior experience representing whistleblowers, knowledge of whistleblower laws, and prior results.  And consider the experience of other whistleblowers working with that attorney.  See our client testimonials by clicking here.

Zuckerman Law has written extensively about whistleblower protections for employees of government contractors and grantees, including the following articles and blog posts:

false claims act whistleblower lawyers

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.