“Safeco ensures due process by not penalizing government contractors for mere negligence. It does so while accomplishing Congress’s goal of ensuring that companies do not bury their heads in the sand when submitting claims for reimbursement.”
—John Masslon, WLF Senior Litigation Counsel
Click here for WLF’s brief.
WASHINGTON, DC—Washington Legal Foundation (WLF) today filed an amicus brief urging the U.S. Court of Appeals for the Seventh Circuit to protect defendants’ due-process rights in False Claims Act cases. Adopting the position taken by every court of appeals to consider the issue, the U.S. District Court for the Central District of Illinois held that the test for willfulness announced by the Supreme Court in Safeco applies in FCA actions. WLF’s brief urges the appeals court to affirm that decision.
The appeal arises from a pharmacist’s qui tam lawsuit against his former employer—Safeway. The relator claims that Safeway “knowingly” submitted false claims for reimbursement by state and federal healthcare programs. Before a 2016 Seventh Circuit decision clarified the effect of price-matching programs on a drug’s “usual and customary price,” Safeway excluded participants in its price-match program when calculating usual and customary prices. The relator argues that Safeway’s omission constituted knowingly submitting false claims.
As WLF’s brief shows, applying the Safeco standard is necessary to protect defendants’ due-process rights. Because FCA violations carry both punitive civil sanctions and criminal penalties, defendants are entitled to heightened due-process protections. At the core of these protections is the right to fair notice of prohibited conduct. The brief explains that Safeco ensures “due process by not penalizing” government contractors “for mere negligence. It does so while accomplishing Congress’s goal of ensuring that companies do not bury their heads in the sand when submitting claims for reimbursement.” WLF therefore urges the Seventh Circuit to promote due process of law by affirming the District Court’s decision.
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