Supreme Court requires government intervention to dismiss declined qui tam suits, but sets low bar for doing so

by Ben Vernia | June 21st, 2023

On June 16, the United States Supreme Court issued its decision in United States ex rel. Polansky v. Executive Health Resources, Inc., an appeal from the Third Circuit’s decision affirming a District Court’s dismissal of a declined health care fraud suit over the whistleblower’s objection.

Writing for the Court, Justice Elena Kagan reasoned that based on the structure of the qui tam provision in the False Claims Act, the United States could only move to dismiss a case if it is a party, and that the Government must, therefore, first intervene in the qui tam suit before moving to dismiss it. (Although the Government must show “good cause” to intervene after declining, the Court noted that neither party challenged the Third Circuit’s conclusion that the “Government’s request to dismiss the suit—based on its weighing of discovery burdens against likelihood of success—itself established good cause to intervene.”)

Once the Government has intervened, Justice Kagan wrote, Fed. R. Civ. P. 41, which governs voluntary dismissals, provides the standard for the District Court to apply. Rejecting the Government’s position that it had plenary authority to dismiss qui tam suits, the Court held that courts must provide the hearing the False Claims Act requires, but in that hearing, the Government can meet its burden “in all but the most exceptional cases”:

A qui tam suit, as we have explained, is on behalf of and in the name of the Government. The suit alleges injury to the Government alone. And the Government, once it has intervened, assumes primary responsibility for the action. Given all that, a district court should think several times over before denying a motion to dismiss. If the Government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grantthe motion. And that is so even if the relator presents acredible assessment to the contrary.

In the case before it, the Government met the test by identifying significant risks (including discovery costs and the potential infringement on its privileged communications).

Justice Kavanagh concurred in the judgment, but wrote separately to agree with Justice Thomas, whose dissent argued that the qui tam provision was an unconstitutional infringement on the Executive’s Article II power. He also disagreed with the Court’s textual analysis, writing that he Act “afford[s] the Government no power to unilaterally dismiss a pending qui tam action after it has ‘decline[d] to take over the action’ from the relator at its outset.”

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