Knowledge and Reckless Disregard Under the False Claims Act: What the Company Knew When It Acted

False Claims Act scienter means the knowledge behind a false claim: what the company knew, deliberately avoided learning or recklessly disregarded when it submitted the claim. Actual knowledge, deliberate ignorance and reckless disregard can each satisfy that requirement. If you saw a billing concern reach management and the same claims keep going out, your knowledge of that conversation matters alongside the billing records. The question reaches inside the business, whether it sought government payments or avoided money it owed.

What False Claims Act Scienter Means

The False Claims Act’s knowledge requirement covers three states of mind. They give internal communications, warnings and decisions a precise role in a whistleblower case.

Actual knowledge means knowing the claim is false. The evidence may show that the people responsible understood what the payment rule required, understood the company’s actual prices or practices, and submitted an inaccurate claim anyway.

Deliberate ignorance means recognizing a serious risk that the information is false and deliberately avoiding the steps that would settle the question.

Reckless disregard includes recognizing a serious, unjustifiable risk that a claim is false and submitting it anyway. The Supreme Court described that form of recklessness in its 2023 decision concerning SuperValu and Safeway.

The Congressional Research Service’s report on the False Claims Act explains that specific intent to defraud is not required. Deliberately avoiding the truth can be enough.

For an insider, that puts the company’s understanding at the center of the story. The warning, the discussion it prompted and the decision that followed can explain what the billing data alone cannot.

What the Company Believed When It Submitted the Claim

False Claims Act scienter turns on the company’s understanding when it submitted the claim. A reasonable explanation developed afterward cannot erase evidence that the company believed its claims were false at the time.

The Supreme Court’s decision arose from whistleblower allegations about prescription-drug prices. The companies operated retail pharmacies. The whistleblowers alleged that the pharmacies offered customers discounted prices while reporting higher retail prices for Medicare and Medicaid reimbursement.

The payment arrangement explains why the difference mattered. Medicaid reimbursement often depended on the pharmacy’s usual and customary charge to the public. Medicare Part D plan sponsors contracted with pharmacies, sometimes through pharmacy benefit managers, and many of the contracts in these cases also limited reimbursement by that price. The alleged overcharges fell on publicly funded health care programs.

According to evidence the whistleblowers presented, Safeway charged $10 for 94% of its cash sales of a 90-day supply of a cholesterol drug between 2008 and 2012, while reporting usual and customary prices as high as $108. That comparison puts the business question in focus: what price did the pharmacy ordinarily charge, and what did its people understand they were supposed to report?

The lower courts had accepted an approach under which a reasonable interpretation of the pricing language could defeat the knowledge requirement, even if the company did not believe that interpretation when it billed. The Supreme Court rejected that approach. What the company itself understood mattered.

We think that is the right place to look. An explanation assembled after the bills went out cannot tell us what management understood before they went out.

An Ambiguous Rule Can Still Come With a Clear Warning

An ambiguous payment rule can still support a knowledge finding when the company understood its meaning or consciously disregarded a substantial risk that its claims were false. The words on the page and the information inside the company belong in the same picture.

In the pharmacy cases, the whistleblowers presented evidence that both companies received a pharmacy benefit manager’s notice explaining that usual and customary prices included discounted prices. Safeway also received that message from state Medicaid agencies. They alleged that executives understood the issue and tried to keep the discounts from regulators and contractors.

The opinion describes executive communications about how visible the discount programs should be. It also reproduces an instruction in Safeway documents that cautioned employees not to:

The same documents directed employees to match Walmart prices. The whistleblowers offered that contradiction as evidence that the company understood the problem with its reported prices.

Match the price. Keep the instruction off paper.

We see why an insider would remember that direction. It speaks to what the business wanted employees to do, what it wanted outsiders to believe, and who understood the difference.

We trace who received the notice, what they understood it to mean, what they said about the claims and whether the disputed billing continued. That connects the warning to the decisions behind the bills.

Connecting the People, the Decision and the Claim

Evidence of corporate knowledge connects information to the people who received it and the decisions they made. A company can have a sales record in one department, a payment requirement in another and the claim in a third. The communications between them can explain how those pieces came together before billing.

We examine who understood the connection, what reached the people responsible for the claim and what they did with it.

An insider can supply that context. You may know who discussed the pricing notice, why a manager wanted a practice kept out of written instructions, or how the decision reached the people submitting claims. Those details give the dates and documents meaning.

In the pharmacy example, the sales records describe what customers paid. The claims describe what the pharmacies reported. Notices and internal communications address what the company understood about the difference.

We work through those connections with you, from the payment requirement to the information available inside the business and the claims that followed. The useful account is specific about roles, timing and decisions. It lets the company’s own conduct explain its understanding.

The Same Knowledge Question in Customs Fraud

The knowledge question extends beyond healthcare to money a company owes the government. Knowingly avoiding that payment can be a reverse false claim. In a customs case, the relevant records concern imported goods, the duty owed and the company’s understanding when it made its declarations.

Sigma Corporation’s case involved antidumping duties on imported welded outlets. The Ninth Circuit’s 2025 decision applied the Supreme Court’s knowledge standard to evidence of inadequate inquiry into the duties. A later clarification about which goods the duty order covered did not erase the question of what the importer understood earlier.

That gives the customs insider a recognizable version of the pharmacy issue. The product and payment rule change, but the company’s understanding at the time still matters. We examine the declaration alongside what people inside the importing business knew about the duty.

A whistleblower case under the False Claims Act, known as a qui tam case, can pay 15% to 30% of what the government recovers.

When You Know Who Heard the Warning

If you saw a warning reach the people approving claims or customs declarations and know what they did next, speak with our whistleblower experts about that decision. We work beside you to build the case around what the company understood, how it responded and what the government paid or went without. We bring in False Claims Act whistleblower lawyers who know your industry and how to connect internal decisions to the money, and remain your partners throughout the case.