Supervalu Supreme Court Decision A Major Victory for Whistleblowers

On June 1, the United States Supreme Court unanimously issued a decision in U.S. Ex Rel Shutte v. Supervalu Inc. resulting in a major victory for whistleblowers. The ruling overturns a series of U.S. Court of Appeals decisions that permitted government contractors and Medicare fraudsters to rely upon after-the-fact justification for their misconduct, even in the face of direct evidence that those who illegally billed the government were aware of their frauds. 

The Supreme Court rejected the arguments of the Chamber of Commerce, numerous federal contractors, and mega-million dollar health providers that would have permitted fraudsters to escape liability by attempting to justify their deceit. Instead, the Court held that the focus is on “what the defendant thought when submitting the false claim – not what the defendant may have thought after submitting it.” 

“This is a milestone victory for whistleblowers and their ability to report fraud against the taxpayer,” said Stephen M. Kohn, the principal author of an amicus curiae brief filed in the case on behalf of National Whistleblower Center.

Kohn is a founding partner at Kohn, Kohn, and Colapinto and recently released his whistleblower guidebook, Rules for Whistleblowers, which details the False Claims Act and its role in stopping fraud against the government. 

“The lower courts had created an exception that swallowed the common sense rules against fraud,” Kohn said. “Those decisions have been reversed, and the False Claims Act can remain America’s number one fraud-fighting law.”

The unanimous ruling by Justice Thomas was the outcome of a pitched battle to save the False Claims Act. The winning side was championed by supporters of the whistleblowers, including State Attorneys Generals, the Department of Justice, the National Whistleblower Center, U.S. Senator Charles Grassley, and Taxpayers Against Fraud. 

“Whistleblowers and supporters of the FCA were up against the most powerful anti-whistleblower lobbyists,” Kohn said. “This included the Washington Legal Foundation, the Chamber of Commerce, the National Defense Industrial Association, the Wireless Association, the American Hospital Association, America’s Health Insurance Plans, the Advanced Medical Technology Association, the Biotechnology Innovation Organization, the National Association of Chain Drug Stores, and the Professional Services Council.”

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