Dist. Ct. did not err in entering judgment for defendant in plaintiffs’ False Claims Act (FCA) claim, alleging that defendant knowingly filed false reports of its pharmacies’ “usual and customary" (U&C) drug prices when it sought reimbursement under Medicare and Medicaid. Specifically, defendant listed its higher cash prices as its U&C drug prices, rather than lower price-matched amount that it charged to qualifying customers under its discount program. Medicaid regulations, though, defined “usual and customary” as prices charged to general public, and although Dist. Ct. found that defendant should have reported its discount prices, it properly found that plaintiffs did not establish scienter prong of FCA that included reckless disregard and other scienter terms, where: (1) objective scienter standard established in Safeco, 551 U.S. 47, applied to claims made under FCA; (2) defendant’s understanding of definition of U&C was not made with reckless disregard, but rather was objectively reasonable, where state and federal regulations defining U&C price did not preclude defendant’s interpretation, and relevant manuals were silent about appropriate treatment for price-matching programs used by defendant so as to give warning to defendant that its price-matching program fell within definition of U&C prices; and (3) plaintiffs’ failure to establish objective scienter standard precluded finding that defendant acted “knowingly” in submitting any wrong reports. (Dissent filed.)
Federal 7th Circuit Court
Civil Court
False Claims Act