Court to Weigh False Claims Act Penalties Without Injury Showing

David Fischer was quoted in the Bloomberg Law article, “Court to Weigh False Claims Act Penalties Without Injury Showing,” about the upcoming arguments in United States ex rel. Schutte v. SuperValu Inc. before the 7th U.S. Circuit Court of Appeals on whether companies can be hit with steep civil penalties under the False Claims Act even when the government cannot prove it suffered financial harm. The case stems from a whistleblower suit alleging SuperValu Inc. and others submitted false claims by billing Illinois Medicaid and the federal government for prescription drugs at improper prices. A jury in 2025 found false claims were submitted, but the plaintiffs recovered nothing after a federal judge ruled they failed to prove the pricing caused damages to the government.

The whistleblowers argue the statute requires a penalty for each false claim regardless of damages, pointing to language stating violators are liable for a civil penalty of at least $5,000 per claim. SuperValu, now a subsidiary of United Natural Foods Inc., argues the law’s “plain text” requires proof of damages and warns that per-claim penalties without harm would raise constitutional concerns and produce excessive awards. An amicus brief from the U.S. Chamber of Commerce said the whistleblowers’ approach could result in billions of dollars in penalties, potentially exceeding $6 billion based on the number of claims at issue.

The dispute comes amid mixed outcomes in other courts, including a New York federal case imposing roughly $165 million in penalties against CVS Health Corp. despite no proven harm, an award now on appeal.