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Justices Side With Whistleblowers In Drug Price Fraud Case

The Supreme Court on Thursday revived two cases filed by supermarket whistleblowers who say that SuperValu and Safeway fraudulently reported drug prices to get bigger reimbursements from the government.

Justice Clarence Thomas wrote the unanimous opinion siding with the whistleblowers, who argued that both grocery chains seem to have known their price reporting was wrong when they sent it in to the government, a clear violation of the False Claims Act, reports Courthouse News Service. “It is enough if respondents believed that their claims were not accurate,” Thomas wrote. When a federal judge entered summary judgment for SuperValu, he did not dispute that store had misreported the drug prices. Because of ambiguity in price-reporting requirements, however, the district court determined that that such misreporting could be chalked up to an objectively reasonable misunderstanding.

Pharmacist whistleblowers Tracy Schutte and Michael Yarberry, who could recover three times whatever the government paid because of fraud, appealed to the Supreme Court after a divided federal appeals court panel ruled against them. In the case of SuperValu, customers paid less than the amount advertised — and reported to Medicare and Medicaid — because the store price-matched to entice more customers. The program was so successful that it brought in more than 6 million price matches over the course of a decade, Schutte and Yarberry's petition notes. Because these discounts were offered so frequently, the pharmacists say the discounted prices became the "usual and customary" one, as it's known in the law, and thus the one that the store should have reported to regulators, In their opposition brief, SuperValu and Safeway had maintained that their programs were "aimed at helping uninsured and underinsured customers afford prescription drugs.”


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