Dismissed! Supreme Court Allows the Government to Dismiss False Claims Act Cases Anytime During Litigation
Last week, in United States ex rel. Polansky v. Executive Health Resources, Inc., the Supreme Court held that the government may seek dismissal of a False Claims Act (FCA) action over a qui tam relator's objection even if the government initially declined to intervene in the case. In so doing, the Court has made it difficult (if not technically impossible) for relators to continue to litigate an FCA case if the government moves to dismiss. The case is also noteworthy as Justices Thomas, Kavanaugh, and Barrett signaled their openness to considering whether FCA qui tam provisions are even constitutional under Article II.
In 2012, Jesse Polansky brought a qui tam FCA action against Executive Health Resources, alleging that the company overbilled services to Medicare by certifying in-patient services that should have been provided on an outpatient basis. The FCA's qui tam provision allows an individual, called the relator, to bring the action in the name of the government. The FCA then allows the government to choose whether to intervene, and if it does intervene within a specified period at the beginning of the case, it may conduct the case. If the government declines to intervene, the relator conducts the case. In 31 U.S.C. § 3730(c)(2)(A), the FCA also allows the government to unilaterally move to dismiss the case. Here, the government initially declined to intervene in the case against Executive Health Resources and the case progressed into discovery. In 2019, after extensive discovery, the district court granted the government's motion to dismiss, in which it represented that it had "thoroughly investigated the costs and benefits of allowing the case to proceed." Polansky appealed to the Third Circuit, which held that the government had effectively intervened when it filed its motion to dismiss, and that it had satisfied its burden under Federal Rule of Civil Procedure (FRCP) Rule 41(a), which governs voluntary dismissal.
The Supreme Court granted certiorari to decide whether the government, if it initially declined to intervene in the case, retains the right to dismiss the action over the relator's objection, and, if so, what standard governs the motion to dismiss. The Court held that it does, with Justice Kagan stating for the majority that the government's interest "does not diminish in importance because the Government waited to intervene." Deciding that the government retains the right to dismiss the case, the Court then looked at which standard would govern such a motion. Agreeing with the Third Circuit, the Court found that a qui tam action is subject to the usual voluntary dismissal rule articulated in FRCP Rule 41(a).
In dissent, while disagreeing with the majority's statutory interpretation of the FCA regarding the government's ability to move to dismiss a qui tam case in which it initially declined to intervene, Justice Thomas raised the question of whether the qui tam mechanism of the FCA is constitutional at all. In this regard, Justice Thomas indicated his sympathy for the argument that the qui tam mechanism is an improper infringement on the authority of the Executive under Article II of the Constitution, stating: "[t]here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation." Justice Kavanaugh, joined by Justice Barrett, noted his agreement with Justice Thomas on this point and his view that the Court should consider these arguments in a later case.
If you have any questions about the Polansky decision or FCA cases in general, please contact one of the Miller & Chevalier attorneys listed below:
This alert was republished by the Coalition for Government Procurement.
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