Determining Actual Damages
SuperValu: Relators’ SCOTUS Victory Turns Pyrrhic After Jury’s Defense Verdict and Denial of Post-Trial Motions
Last week, after fourteen years of litigation, United States ex rel. Schutte v. SuperValu, Inc. arrived at its likely end after the U.S. District Court for the Central District of Illinois rejected relators’ bid for a new trial after a jury returned a defense verdict earlier this year. Filed in 2011 and unsealed in 2015, SuperValu led to a landmark Supreme Court decision on the FCA scienter requirement in 2023, with SCOTUS holding that scienter turned on a defendant's subjective belief not what an objectively reasonable person may have thought. After remand, the district court held a three-week jury trial in February 2025. The jury found in favor of the relators on scienter but concluded there was insufficient evidence of damages, rendering what was ultimately a favorable verdict for the defense. The relators alleged SuperValu violated the FCA by reporting prices to Medicare and Medicaid that were higher than those “usually and customarily” charged to the public. In particular, the relators alleged that the reported retail prices did not account for discounts that SuperValu regularly applied to the majority of drug sales to the general public. Relators contended this violated Federal regulations requiring reimbursements paid to pharmacies by Medicare and Medicaid be limited to the “usual and customary” price of the drug as it is offered to the general public. To prove a violation of the FCA, the relators had to prove SuperValu had scienter—that SuperValu knew the claim was false. SuperValu argued it did not knowingly submit any false claims because it adopted applied objectively reasonable interpretation of “usual and customary” by not including discounts in its reimbursement requests. The district court and Seventh Circuit had agreed with SuperValu that this defeated the relators’ claims. SCOTUS, in a unanimous decision, reversed, however, holding that a defendant’s subjective belief of a claim’s falsity was the relevant focus in determining scienter. SCOTUS explained that a later-developed, objectively reasonable interpretation could not, on its own, defeat scienter if the defendant did not subjectively believe that interpretation to be true. After remand, relators moved for summary judgment, arguing that SuperValu knew it submitted false claims because it was previously informed its discount prices were the “usual and customary” prices, SuperValu subjectively believed its discounted prices were its “usual and customary” prices, and SuperValu tried to hide its discounted prices from regulators. The district court granted summary judgment on falsity and materiality, narrowing the jury’s factfinding to scienter and damages. During trial, the jury was presented with two questions: (1) whether SuperValu knowingly submitted false claims, and (2) whether SuperValu’s false claims resulted in government damages. On the first question, the jury found SuperValu did knowingly submit false claims to the government. However, on the second, the jury found the relators failed to prove the false claims damaged the government, and the court entered judgment in favor of the defense. In post-trial motions, relators argued that causation was not a required element of liability under their theory of the FCA violation. Because the FCA provides for two forms of damages, actual damages and civil penalties assessed on a per-claim basis, the relators argued SuperValu could still be liable for per-claim civil penalties based on the submission of knowingly false claims even absent actual damages. The district court rejected relators’ arguments, noting that some circuits have adopted a distinction between these two types of liability, but that the Seventh Circuit has not, instead having chosen to “leave [the question] for another day.” United States ex rel. Calderon v. Carrington Morg. Servs., LLC¸ 70 F.4th 968, 978 (7th Cir. 2023).
November 7, 2025
by Chris DeLong, Matthew Gillespie, and Joe Coffey
Determining Actual Damages
Early Resolution of FCA Civil Damages Under the Eighth Amendment's Excessive Fines Clause? A Pending Case in Washington May Provide the Answer
The False Claims Act authorizes civil penalties between $10,781 to $21,563 per false claim, as well as three times the amount of damages which the government sustains (i.e. treble damages). The Eighth Amendment provides that "[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." The Supreme Court of the United States has recognized that a statutory penalty constitutes a "fine" subject to Eighth Amendment review if it constitutes punishment for an offense. Accordingly, the Fourth, Seventh, Eighth, and Ninth Circuit Court of Appeals have determined that the per-claim penalty and treble damages provided for under the FCA are subject to scrutiny under the Excessive Fines Clause of the Eighth Amendment because they have a punitive purpose, at least in part. A punitive sanction violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant's offense. Nonetheless, federal courts undertaking this Eighth Amendment analysis have generally upheld FCA per-claim penalties and treble damages. Proportionality of a punitive sanction is determined by a variety of factors, including the reprehensibility of the defendant's conduct; the relationship between the penalty and the harm to the victim; the sanctions in other cases for comparable misconduct; the possible maximum penalty available under the FCA and other statutes; and the legislative intent for the statute. See United States v. Aleff, 772 F.3d 508, 512 (8th Cir. 2014); United States v. Mackby, 339 F.3d 1013, 1016-18 (9th Cir. 2003). The Supreme Court has noted that the treble damages provision of the statute has a compensatory aspect, in addition to its punitive objectives, because some amount of money beyond actual damages is "necessary to compensate the Government completely for the costs, delays, and inconveniences occasioned by fraudulent claims." Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 130 (2003). Additionally, the treble damages provision allows the government to recover some measure of the amount it must pay to compensate relators in qui tam actions. See United States ex rel. Drakeford v. Tuomey, 792 F.3d 364, 388 (4th Cir. 2015). In contrast, the per claim penalty is purely punitive. Id. In the context of a FCA jury trial, the jury will generally be charged with determining the measure of the damages to the government and the number of false claims. The Court will then apply the treble multiplier to the damages award and, utilizing the jury’s determination of the number of false claims, determine what amount (between $10,781 to $21,563) to assess for each false claim. In cases involving the submission of hundreds or even thousands of false claims/statements (e.g., Medicare fraud claims), FCA damage awards can be daunting. As a result, Defendants may raise the Excessive Fines Clause as a defense to a massive award. However, with some exceptions, courts have generally upheld these awards, taking into account the above-mentioned factors as well as the general public interest in preventing fraud on the government. In litigation pending in the U.S. District Court for the Eastern District of Washington, United States of America et al v. Washington Closure Hanford LLC, et al, the defendant contractor raised constitutional challenges to the FCA’s penalties and treble damages provisions as an affirmative defense in its answer. The Government moved for summary judgment arguing that this defense was premature because the Court had not yet imposed penalties or treble damages; this constitutional challenge should instead be raised at the judgment phase. The contractor responded that courts can address the merits of such a defense based on the amount of damages sought by the Government, which in this case are in excess of $70 million. While the timing for addressing this Eighth Amendment challenge is typically at the post-trial stage, courts have not clearly addressed whether it may be considered in advance, which may provide a strategic advantage to litigants. Accordingly, the pending motion for summary judgment presents an interesting question for the trial court to resolve which may help provide further guidance for FCA litigants. FCA Now will be monitoring the Court’s ruling and keep you updated with any key developments.
December 29, 2017
by Benjamin Greenberg
Determining Actual Damages
Government Contractor Awarded Attorney Fees for Defending Against "Unreasonable" FCA Claim
The U.S. Court of Appeals for the Sixth Circuit recently concluded that a contractor should obtain an award of attorney fees for having to defend against an “unreasonable” False Claims Act (“FCA”) suit. In United States ex. rel. Wall v. Circle C. Constr. LLC, the Government sued a contractor that built warehouses for the U.S. Army. During construction, it was alleged that the contractor’s subcontractor paid two electricians $9,900 less than the wages mandated by the Davis-Bacon Act, a federal law that sets wages on public-works projects. That underpayment rendered false the “compliance statements” that the contractor periodically sent to the Government, and the Government subsequently that the contractor had made a false claim against the United States. In its lawsuit, the Government sought $1.66 million in damages. The Government claimed that the contractor’s allegedly false claim of $9,900 had caused $554,000 in “actual damages,” which it was entitled to treble under the FCA. The Government argued that the $9,900 underpayment had “tainted” all of the subcontractor’s electrical work and rendered the total value ($554,000) of the performance worthless. During a previous appeal, the Sixth Circuit rejected that argument. It held that the underpayment did not “taint” the total value of the electrical work and reversed a $763,000 judgment for the Government. It remanded for an award of $14,748—less than one percent of the Government’s demand. On remand, the contractor sought $468,704 in attorneys’ fees it had spent defending against the Government’s $1.66 million claim. The contractor’s demand for attorneys’ fees arose out of the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(D), which states that a court must “award to the [defendant] the fees and other expenses related to defending against the excessive demand” if the Government’s original demand was both (1) “substantially in excess of the judgment finally obtained” and (2) “unreasonable when compared with such a judgment.” The district court denied the contractor’s motion for fees, but the Sixth Circuit reversed, explaining that it would be an “understate[ment]” to say the government’s demand of $1.66 million was “substantially in excess” of the $14,748 judgment. It also found that the demand was “unreasonable compared to the judgment.” In the FCA context, actual damages are “the difference in value between what the government bargained for and what the government received.” Here, the government bargained for buildings and wages; it got the buildings but “not quite all” of the wages. The shortfall—$9,900—was the government’s actual damages. The court found that no reasonable person could accept that the underpayment tainted the entire value of the electrical work because the Government benefitted “every minute of every day” in the form of functioning electrical systems. The Government argued that the contractor was not entitled to fees because its underpayment amounted to “bad faith,” one of the exceptions listed in 28 U.S.C. § 2412(d)(1)(D). The court disagreed and found that the Government failed to show that the underpayment was anything other than “an honest mistake.” The court noted that, unlike many FCA cases, this case did not involve an systematic attempt to defraud the government. Rather, it involved a $9,900 inaccuracy in a $20 million project. The court also noted that the subcontractor’s prices did not clearly state how much it paid the electricians and that both of the contractor’s co-owners testified that they submitted “compliance statements” with the honest belief that they were true. Although the district court found that the contractor was “reckless” in not knowing whether its “compliance statements” were accurate, that standard was less stringent that bad faith. The Government also argued that an attorneys’ fee award would “chill[]” its ability to enforce the FCA. In response, the court observed: “One should hope so. In this case the government made a demand for damages a hundredfold greater than what it was entitled to, and then pressed that demand over nearly a decade of litigation, all based on a theory that as applied here was nearly frivolous.” The court then reversed and remanded for an award of attorneys’ fees to the contractor.
September 6, 2017
by Alan J. Iverson
