Late last year, the Seventh Circuit joined a growing chorus of circuits to cabin expansive False Claims Act liability by holding in United States ex rel. Schutte v. SuperValu, Inc. that the Act requires an objective scienter standard for claims defendants violated ambiguous legal obligations, which considers whether (1) the defendant’s interpretation of a statute or regulation, even if incorrect, was objectively reasonable, and (2) any authoritative guidance warned the defendant away from that interpretation.
The court passed on answering whether agency guidance must be binding to be sufficiently authoritative to warn a defendant away from an otherwise objectively reasonable interpretation of a statute or regulation. This week, the court again dodged the question but spent a bit more time explaining why the agency guidance at issue—a single footnote in a lengthy agency manual—did not undercut the reasonableness of the defendant’s statutory interpretation.
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