Arguments were heard in the case of United States ex rel. Polansky v. Executive Health Resources, Inc., No. 21-1052 to determine whether and on what statutory grounds, the government, after initially declining to intervene, may subsequently intervene and dismiss a qui-tam False Claims Act (“FCA”) suit. The Court’s decision will resolve a dispute regarding the balance of power between an individual whistleblower and the Department of Justice (“DOJ”).
Executive Health Resources (“EHR”) and the government argue that 31 U.S.C. § 3730(c)(2)(A) grants the government unfettered discretion to dismiss a qui tam lawsuit at any time as long as the relator receives notice and an opportunity to be heard. On the other hand, Polansky argues that the government relinquishes its right to dismiss once it declines to intervene. If the Court’s line of questioning is any hint to its decision, then it appears that the Court will affirm the government’s authority to dismiss at any time during a qui tam lawsuit due to Article II concerns.[1]
Background
The False Claims Act (the “Act”) permits private individuals, acting in the name of the government, to assert FCA claims “for the person and for the United States Government.” 31 U.S.C. § 3730. These individuals are known as “relators.” United States ex rel. Polansky v. Executive Health, No. 19-3810, *6 (3d Cir. 2021).Relator-initiated lawsuits, known as qui tam actions, “effectively deputize citizens to act as private attorneys general, compensated with a share of the money recovered.” Id. The interests of relators and the government typically align and in most instances the government will either intervene in support of the relator, or allow the relator to move forward with the action on their own. In other rare instances, such as the present case, the government opposes the relator’s suit and seeks to dismiss the case as meritless and/or unduly burdensome.
Polansky worked as a consultant for EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians. Id. During his employment, Polansky became concerned that EHR was systematically enabling its client hospitals to over-admit patients by certifying inpatient services that should have been provided on an outpatient basis. Id. Polansky alleged that EHR caused hospitals to bill the government for inpatient stays that were “not reasonable and necessary” for diagnosis and treatment – a statutory requirement for reimbursement. Id. (quoting 42 U.S.C. § 1395y(a)(1)(A)). Polansky alleged that EHR’s certifications were therefore false and caused the submission of false claims to the government. Id.
Procedural Background
In 2012, Polansky filed an FCA action. The complaint remained under seal for two years while the government conducted its own investigation. It then declined to intervene in the case. Id. At that point, the complaint was unsealed and Polansky, “for himself and for the United States Government,” continued as plaintiff. 31 U.S.C. § 3730(c)(3) (under the FCA, “if the government elects not to proceed with an action, the person who initiated the action shall have the right to conduct the action”).
In February 2019, however, the case took an unexpected turn: the government notified the parties that it intended to dismiss the entire action pursuant to 31 U.S.C. § 3730(c). Under paragraph (c)(1) of that section, a relator’s ability to continue a suit is limited in various ways “if the Government proceeds with the action.” One of those limitations is that “the Government may dismiss the action notwithstanding the objections of the [relator] so long as the relator receives notice and an opportunity to be heard on the motion.” 31 U.S.C. § 3730(c)(2)(A). The district court granted the government’s motion to dismiss. The Third Circuit affirmed the decision.
The Arguments Before the Supreme Court
Polansky’s core argument is that the government has no statutory authority to dismiss a qui tam action after initially declining to proceed with the action. To support this argument, Polansky states in his brief that the FCA’s plain text and structure “establish that the government’s dismissal authority is limited to cases where it ‘proceeds’ with an action and takes over the case.” Brief for the Petitioner, p.10, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022). Thus, Polansky argues, where the government fails to take over the case, the relator is granted a unitary right to conduct the action and its ability to control the case is “exclusive.” Id.
On the other hand, EHR and the government argue that Section 3730(a)(2)(A) expressly authorizes the government to dismiss the action over the relator’s objection so long as the relator received notice of the motion. EHR further argues that since Section 3730(c)(3) permits the government to “intervene at a later date upon a showing of good cause” after initially declining to proceed with the case, it follows that upon such intervention the government has the authority to resolve the action, including through compromise or dismissal. Brief for the Respondent, p. 15, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022).
During oral arguments, Justice Jackson probed Polansky’s argument, stating that “the history of the statute is pretty clear that Congress only amended [the statute] to allow for later intervention [by the government] because it was concerned that the government didn’t have the opportunity to intervene after the initial period.” Transcript of Oral Argument at 12, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022). Polansky responded that while Congress may have amended the statute to allow the Government to intervene at a later time, it may only do so “without affecting and without limiting the status and rights of the relator.” Transcript of Oral Argument at 13, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022). Justice Jackson then asked, rather cynically, “so what’s the purpose of the intervention then if they can’t then take over the action and proceed?” Id. In support of Justice Jackson’s line of questioning, Justice Barrett and Justice Kavanaugh both asserted in their questions that because Congress permitted the government to intervene at a later date, its intent was that the government proceed as a “full party.” Transcript of Oral Argument at 14-17, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022). As a full party, the government has, therefore, the authority to move to dismiss the complaint. Justice Barrett and Justice Kavanaugh also expressed concerns that Polansky’s interpretation of the statute raises Article II concerns because the government’s power to control prosecution of a case would be removed. Id.
Conclusion
The Court’s line of questioning suggests that it is likely that it will affirm the government’s ability to intervene in a qui tam lawsuit at any time during the action. Such decision would streamline the government’s ability to intervene in, and then move to dismiss, relator-initiated lawsuits that it finds to be meritless or unduly-burdensome following investigation.
FOOTNOTES
[1] Article II of the United States Constitution contains the Vesting Clause, which requires that the President of the United States “take Care that the Laws be faithfully executed.” U.S. Const. art. II, § 3. EHR argues that allowing a private individual to prosecute a civil action on behalf of the United States while denying the Executive Branch the ability to control the action would risk depriving the Executive Branch of the ability to “ensure faithful execution of the laws.” Brief for the Respondent, p. 14, United States ex rel. Polansky v. Executive Health, No. 21-1052 (2022).