On Thursday, September 15, 2022, an en banc panel of the Fourth Circuit Court of Appeals heard oral argument in the rehearing of an important case concerning the “knowledge” element of the False Claims Act—United States ex rel. Sheldon v. Allergan, No. 20-2330. The panel was active, posing numerous questions for both parties during the oral argument, which spanned approximately 94 minutes. The audio recording of this hearing is available here.
As Covington has reported in the past, this appeal concerns questions related to the scope of the False Claims Act’s “knowledge” requirement. In its January 25, 2022 decision, the Fourth Circuit upheld the district court’s dismissal, finding that under the FCA “a defendant cannot act ‘knowingly’ as a matter of law if it bases its actions on an objectively reasonable interpretation of the relevant statute when it has not be warned away from the interpretation by authoritative guidance” and that “this objective standard precludes inquiry into a defendant’s subjective intent.” United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340, 348 (4th Cir. 2022). That opinion was also subject to a strong dissent by Judge Wynn, which argued that the majority opinion disregarded two of the three FCA’s enumerated forms of knowledge (actual knowledge and deliberate ignorance), focusing only on the Safeco test for objective recklessness.