During oral argument, some of the justices sought to clarify the petitioners' question of whether subjective knowledge is a factor in determining liability under the FCA.

"We're being asked whether the intent of someone to make a false statement is actionable even if later they come up with a different — an objectively reasonable argument, correct?" Associate Justice Sonia Sotomayor asked Tejinder Singh of Sparacino PLLC, who argued for the petitioners and replied in the affirmative.

Arguing for the pharmacies, Carter G. Phillips of Sidley Austin LLP said, "The right answer to this case is that our clients followed an undeniably objectively reasonable approach in what they did."

Associate Justice Ketanji Brown Jackson questioned his emphasis on "objectively reasonable."

"You say it doesn't matter, subjective intent to evaluate actual knowledge for the purpose of the FCA," she said.

Phillips agreed.

Associate Justice Elena Kagan asked, "Don't you think it's a little odd to read a statute … like this to say that … subjectivity doesn't matter?"

Deputy Solicitor General Malcolm L. Stewart, arguing for the federal government as amicus curiae in support of the petitioners, said the pharmacies should have disclosed whether they considered their discounts when they calculated the "usual and customary" drug prices.

According to Brett W. Johnson of Snell & Wilmer LLP, who is not involved in the suits, the 7th Circuit decisions are "likely in peril."

"It appears the majority of the [Supreme] Court is persuaded that an argument about the lack of government guidance on regulatory compliance is best suited to go to the subjective intent element and what the actors knew or did not know at the time of the act," he said.

According to J. William Eshelman of Clark Hill PLC, also not involved in the suits, "The [Supreme] Court apparently took these cases up as a means of resolving the considerable disagreement in the circuits concerning [the FCA's knowledge] requirement, and to establish a uniform standard applicable to the FCA's knowledge requirement."

David J. Chizewer of Goldberg Kohn Ltd., who is not involved in the cases, said that discussion of "what should be expected from persons doing business with the government" was significant.

"At least one justice found it 'extreme' to hold a contractor to such a standard," Chizewer said. "Yet, that would seem to be the bare minimum of what we, as a society, should expect from each other."