The
justices were set to hear arguments in an appeal by three
whistleblowers of lower court rulings in favor of Safeway Inc,
owned by Albertsons Companies Inc, and SuperValu Inc, part of
United Natural Foods Inc.
The litigation was filed under a law called the False Claims Act
that lets individuals sue on behalf of the U.S. government when
they have evidence of fraud against federal programs. The
whistleblowers, seeking monetary damages, accused the companies
of offering prescription drugs at discounted prices to most
customers paying out of pocket, while improperly charging higher
rates to the government.
Government healthcare programs reimburse pharmacies for
dispensing covered drugs to beneficiaries.
At issue is whether companies can avoid liability for fraud by
showing that an "objectively reasonable" reading of the law
supported their conduct - regardless of whether they truly
believed that interpretation at the time of their alleged
wrongdoing.
The whistleblowers said federal law requires pharmacies to bill
the Medicare and Medicaid programs the same prices it charged
the general public under a rate known as a pharmacy's "usual and
customary" price. They also said both companies knew they were
defrauding the government and worked to conceal their pricing
practices.
The companies fended off the whistleblower lawsuits by claiming
that Medicare and Medicaid billing requirements were unclear and
that their practices were supported by a reasonable reading of
the law.
The Chicago-based 7th U.S. Circuit Court of Appeals sided with
the companies. The court said the pharmacy operators could not
be held responsible for fraud given the "objectively reasonable"
interpretation of the law in their favor - even if they did not
actually believe that interpretation and intended to deceive the
government.
President Joe Biden's administration backed the whistleblowers
in their appeal to the Supreme Court. Lawyers for the
administration urged the justices to reverse the 7th Circuit,
saying the ruling undermined the False Claims Act.
(Reporting by John Kruzel; Editing by Will Dunham)
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