Supreme Court To Consider Whether The Government Can Dismiss A False Claims Act Suit If It Opted Not To Intervene At The Outset

• Published date: 28 June 2022
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Government Contracts, Procurement & PPP, Trials & Appeals & Compensation, Civil Law
• Law Firm: Morrison & Foerster LLP
• Author: Mr J. Alex Ward and Victoria Dalcourt Angle

The U.S. Supreme Court has agreed to consider whether the Government can dismiss a False Claims Act ("FCA") lawsuit pursuant to 31 U.S.C. ' 3730(c)(2)(A) over the Relator's objections after initially choosing not to intervene in the case and, if so, what standard applies. The Supreme Court's decision should resolve a circuit split over whether and under what circumstances the Government can invoke its authority to dismiss qui tam cases when it initially declined intervention.

Polansky's Claims

Jesse Polansky brought a qui tam action under the FCA on behalf of the United States, alleging that Executive Health Resources, Inc. ("EHR") caused its client hospitals to fraudulently bill Medicare and Medicaid by falsely designating patient admissions as inpatient when they should have been marked as outpatient. Polansky filed his Complaint under seal in July 2012, and the Government declined to intervene in the case in June 2014. Thereafter, Polansky served the unsealed Complaint on EHR and litigated the case before the District Court for the Eastern District of Pennsylvania.

In August 2019, five years after choosing not to intervene, the Government filed a Motion to Dismiss Relator's Complaint under 31 U.S.C. ' 3730(c)(2)(A), citing the low likelihood of success, the concern that material it deems privileged has been produced and will be used, and the expense of the litigation (including internal staff obligations; anticipated costs related to document production; expected attorney time associated with preparing depositions of government personnel, monitoring the litigation, and filing statements of interest). The District Court granted dismissal in November 2019. ¹ Polansky appealed to the Third Circuit, arguing the Government had given up its right to seek dismissal of his suit when it initially declined to intervene.

Circuit Split

The FCA allows private whistleblowers (called "relators") to bring claims of fraud on behalf of the Government and receive a share of the proceeds. The Government has the option to intervene in the case. If the Government declines to intervene, the relator may continue to litigate the case on their own. Polansky considers the scope of the Government's authority when it declines to intervene at the outset and later opposes the relator's suit.

Under 31 U.S.C. ' 3730(c)(2)(A), the Government has the right to dismiss a qui tam action "notwithstanding the objections of the [relator]" so long as the relator receives notice and an...