On
As in SuperValu, the Seventh Circuit's decision was premised on the standard for “reckless disregard” established by the
The Seventh Circuit then considered whether “the only relevant guidance relator . . . identified,” the Medicare Prescription Drug Benefit Manual (the “Manual”), was “authoritative guidance” that would have warned the defendant away from its interpretation. The court found that the Manual was “insufficiently specific” as to the defendant's competitor-price matching discount program but that it was “specific enough to put [the defendant] on notice that it should have reported its [discount]-club prices as its U&C prices.” Nevertheless, the court found that, despite the Manual's specificity, the guidance was not sufficiently authoritative because: (1) it was contained in a “single footnote in a fifty-seven page chapter of the voluminous [Manual]”; and (2) “the footnote went in and out of the Manual during the relevant time period.” The defendant argued that the Manual was also not “authoritative guidance” because it was not “binding,” i.e., issued through notice-and-comment rulemaking or binding administrative adjudications, but the Seventh Circuit opted to leave the question of “whether agency guidance must always be binding to satisfy
The dissent was written by the same judge who wrote the dissent in SuperValu and contains many of the same arguments, including that the majority effectively “create[d] a safe harbor for deliberate or reckless fraudsters whose lawyers can concoct a post hoc legal rationale that can pass a laugh test.” Similar arguments were also raised by the dissent in a recent Fourth Circuit decision reviewing a defendant's interpretation of the Medicaid Drug Rebate Program's “best price” requirements (discussed here).
The Seventh Circuit's decision can be found here.
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