Supreme Court allows overcharging lawsuits against SuperValu, Safeway to proceed

The U.S. Supreme Court reversed a lower court's decision to strike two whistleblower lawsuits alleging SuperValu and Safeway knowingly charged Medicare and Medicaid far more than they charged customers for drugs. 

In a unanimous opinion issued June 1, the court ruled the pharmacies could not claim they did not knowingly violate the False Claims Act as a defense. 

In the opinion, Justice Clarence Thomas wrote the whistleblowers presented evidence the pharmacies considered the prices they reported false. 

The decision reverses an August 2021 7th Circuit Court of Appeals ruling that SuperValu and Safeway were not liable for damages, because the companies had not knowingly violated the False Claims Act, even if they "might suspect, believe, or intend to file a false claim." 

The case began in 2006, when Walmart began offering certain drugs at $4 for a 30-day supply. Other pharmacies followed suit to remain competitive. 

Whistleblowers alleged that Safeway and SuperValu charged Medicare and Medicaid far more than they charged consumers for drugs. Between 2008 and 2012, Safeway charged customers $10 for a 90-day supply of a common cholesterol drug but told Medicare its typical price was upward of $80, NPR reported in April. 

The lower courts sided with Safeway and Supervalu's argument that their obligation to report "usual and customary" prices to the government did not include the steep discounts they offered. 

If the Supreme Court upheld the appellate court's decision, it could have made future enforcement of the False Claims Act more difficult, according to an analysis from the Cornell University Legal Information Institute.

The decision "sends a strong signal to anybody who would try to exploit legal ambiguities to cheat the public that such tactics won't fly," Tejinder Singh, an attorney for the whistleblowers, told the Wall Street Journal.

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