United States Ex Rel. Polansky v. Executive Health Resources, Inc, Et Al.: Supreme Court Clarifies Standard Under Which Government Can Intervene And Dismiss FCA Actions

• Published date: 20 June 2023
• Subject Matter: Litigation, Mediation & Arbitration, Food, Drugs, Healthcare, Life Sciences, Trials & Appeals & Compensation
• Law Firm: Katten Muchin Rosenman LLP
• Author: Sarah Weber and Elliott M. Bacon

Today, the Supreme Court issued a decision in United States el rel. Polansky v. Executive Health Resources, Inc., et al,¹ clarifying that the government maintains authority to dismiss a qui tam False Claims Act (FCA) action after initially declining to intervene so long as the government intervenes before moving to dismiss. Writing for an eight to one majority, Justice Elena Kagan's opinion resolves a circuit split as to the standard the government must satisfy in moving to dismiss an FCA case.

The Court held that the government maintains authority, with good cause shown, to intervene and move to dismiss an FCA suit even when it initially declined to intervene. The Court further reasoned that a district court facing a government's motion to dismiss should apply Federal Rule of Civil Procedure 41(a), which governs voluntary dismissals in civil litigation.

Background

Enacted during the Civil War, the FCA empowers private citizens to file suit on behalf of the government against those alleged to have defrauded the government. If successful, these actions, known as qui tam suits, entitle private citizens (known as "relators") up to 30 percent of the recovery.

When a relator files a qui tam complaint, the statute provides the government 60 days - which, in practice, is often further extended - to investigate the allegations while the complaint is under seal. After this period, the government may either take over the action or allow the relator to conduct the action on its behalf.² If the government declines to intervene, the "person who initiated the action shall have the right to conduct the action"and the government can later seek leave from the court to intervene "upon a showing of good cause."³ "The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion."⁴

The statute's silence as to a description of the hearing on the motion or any standard the government must meet for dismissal resulted in a circuit split. For instance, the DC Circuit has held that the government has an "unfettered right to dismiss [a qui tam] action,"while, at the other extreme, the Ninth Circuit has applied a comparatively more demanding two-step burden-shifting analysis.⁵ Under the test adopted in the Ninth Circuit, the government must identify a valid governmental purpose and a rational relationship between dismissal and accomplishment of the purpose before the burden shifts to relator to show that the dismissal is fraudulent, arbitrary and capricious, or illegal.⁶

In Polansky, Relator-Petitioner Dr. Jesse Polansky filed a qui tam action in 2012 alleging that Defendant Executive Health Resources provided false Medicare billing certifications that resulted in the submission of false claims to...