Is it enough for a company to develop a rationale on why it believed it was compliant with key contract terms after an allegation of a False Claims Act violation?  That question may now be decided by the Supreme Court.  A recent JD Supra article from the firm of Husch Lowell, LLP stated that lower courts had agreed with the company that an after-the-fact rationale on why it believed it was compliant with its contract was sufficient.  (United States ex rel. Schutte et al. v. Supervalu Inc. et al.).  Government lawyers argued, however, that an after-the-fact reasonable interpretation of an ambiguous regulation would essentially create “a safe harbor for deliberate or reckless fraudsters whose lawyers can concoct a post hoc legal rationale that can pass a laugh test.”  Contractors absolutely need to pay attention to what the Court may say here.  It is an established best practice to ensure compliance with applicable contract rules before submitting an invoice, lest a company run afoul of the False Claims Act.  The Act allows the government to collect up to treble damages and levy hefty per-invoice fines.  Companies typically rack up in excess of a million dollars in legal and other fees to defend against a false claims allegation.  The crux of the matter here is when a company that has all relevant compliance practices and procedures in place submits an improper claim.  Did they do so knowingly?  It should be noted that “knowingly” does not create a loophole for companies that pay no attention to compliance.  Indeed, “recklessness” is the easiest and most prevalent basis on which False Claims Act cases are brought in the first place.   Government contract attorneys speculate that the Supreme Court could decide the case narrowly – that the company must have actually held the reasonable interpretation contemporaneous with its submission of claims—or more broadly, i.e., that a violation of the False Claims Act must be based on the knowing violation of an unambiguous known legal obligation, such that regulatory ambiguity essentially bars FCA liability.  While government contractors should follow the Court’s progress here carefully and be prepared to alter their compliance actions depending on what it decides, False Claims Act compliance is always something that needs to be taken seriously.