In recent developing case law, more than a half dozen appellate courts, based upon Supreme Court precedent, have now ruled that when a defendant has a reasonable interpretation of an ambiguous statute, regulation, or contract, and there is no official governmental guidance to warn defendant away from its reasonable interpretation, there can be no FCA liability. Courts have also observed that this reasonable interpretation doctrine serves multiple purposes, including that those charged with violating the law should have notice of the law, government agencies should not be allowed to draft amorphous rules and regulations to enhance flexibility but then use the ambiguity they created to bring fraud actions, and essentially penal statutes, like the FCA, should not be applied “through ambush.”
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