One Flew Over the Cuckoo's Nest

What does the chief mean when he says, “It’s the truth even if it didn’t happen ?”

Chapter one

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The men in the ward are often asked to discount what they have seen or what is real by those in charge. Chief is saying that what he says is truthful, even when someone tells them to deny whatever it is because " it didn't happen."

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One Flew Over the Cuckoo's Nest