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.
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.”
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
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).
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