The United States Court of Appeals for the Fourth Circuit was evenly divided on whether a party can be held liable for defrauding the government if it can point to an “objectively reasonable” interpretation of the law to support its conduct.  The Court’s split leaves this issue unresolved in the Fourth Circuit, but other Circuits have adopted the “objectively reasonable” standard, and the Supreme Court is set to rule on it next year. 

The U.S. Department of Justice and others have criticized the “objectively reasonable” standard for allowing those who commit knowing fraud to go unpunished.  In particular, DOJ has noted that a defendant “can actually understand a requirement correctly, choose to violate it but avoid all liability if its attorney can conjure up a post-hoc alternative interpretation of the requirement that is at least objectively reasonable.” 

Here, the Fourth Circuit’s ruling affirmed, by default, the lower court’s dismissal of a $680 million whistleblower case against Forest Laboratories (now part of AbbVie Inc.), which alleged that the company defrauded Medicaid by reporting inaccurate drug price data. 

Click here to read about the Fourth Circuit’s decision.

Click here to learn more about G&G’s leading whistleblower practice.