False Claims Act (FCA): Is Knowledge Objective or Subjective

Episode Date: May 24, 2023

In this episode of Stark Integrity, Bob Wade (“Captain Integrity”) explores a fundamental question under the False Claims Act (FCA): what does it mean to “knowingly” submit a false claim—and is that standard objective or subjective?

Bob breaks down how knowledge is evaluated under the FCA and why understanding this concept is critical for healthcare organizations seeking to manage compliance risk effectively.

Understanding “Knowledge” Under the FCA

Bob begins by explaining that liability under the FCA hinges on whether a person or organization knowingly submitted a false claim.

He notes that “knowledge” under the FCA is broader than many realize and includes:

• Actual knowledge of wrongdoing
• Deliberate ignorance of the truth or falsity of information
• Reckless disregard for accuracy

This means that organizations do not need to have clear intent to defraud in order to face potential liability.

Objective vs. Subjective Standards

A central focus of the episode is whether the knowledge standard should be viewed as objective (what a reasonable person should know) or subjective (what the individual actually believed).

Bob explains that:

• Courts often grapple with how to apply these standards
• Evidence of intent may include both objective facts and subjective beliefs
• The distinction can significantly impact how cases are evaluated

Understanding this distinction is essential because it influences how compliance programs should be designed and enforced.

The Risk of “Reckless Disregard”

Bob highlights that one of the most important—and often overlooked—components of FCA liability is reckless disregard.

He explains that:

• Organizations can be liable even without actual knowledge
• Failing to ask questions or investigate concerns can create exposure
• Ignoring obvious risks or inconsistencies may be treated as knowing conduct

This reinforces that compliance programs must be active and engaged, not passive.

The Importance of Documentation and Process

A key takeaway from the episode is the role of documentation and internal processes in demonstrating compliance.

Bob notes that organizations should:

• Maintain clear records of decision-making
• Document interpretations of complex regulatory requirements
• Ensure that compliance efforts are visible and consistent

Strong documentation can help demonstrate that an organization acted reasonably and in good faith.

Ambiguity and Regulatory Complexity

Bob also acknowledges that healthcare regulations can be complex and, at times, ambiguous.

Bob explains that:

• Reasonable differences in interpretation may exist
• Organizations must rely on informed judgment
• Seeking guidance and documenting rationale is critical

In ambiguous situations, how an organization approaches the issue can be just as important as the outcome.

Building a Defensible Compliance Approach

Bob emphasizes that organizations should focus on building compliance programs that reflect both objective standards and subjective intent.

He suggests that organizations:

• Develop clear policies and procedures
• Train employees to recognize and escalate issues
• Foster a culture where questions and concerns are encouraged

This approach helps reduce the risk that actions could later be viewed as reckless or negligent.

Practical Takeaways

The key takeaway from this episode is that FCA knowledge is a broad and flexible concept that requires careful attention. Organizations should:

• Understand the full scope of the FCA knowledge standard
• Avoid ignoring or overlooking potential compliance issues
• Document decisions and interpretations clearly
• Encourage proactive questioning and issue escalation
• Align compliance programs with both objective and subjective standards

Final Thoughts

This episode highlights that under the False Claims Act, knowledge is not limited to intentional misconduct—it can arise from inaction, oversight, or failure to engage.

Bob’s insights reinforce that organizations must take a proactive and disciplined approach to compliance, ensuring that they not only follow the rules but also demonstrate awareness, diligence, and good faith in their actions.

Click here to listen to this Stark Integrity Podcast Episode:
https://podcasts.apple.com/us/podcast/false-claims-act-fca-is-knowledge-objective-or-subjective/id1588939373?i=1000614255608&l=fr-FR