Analysis: Supreme Court Agrees to Consider Government’s Dismissal Authority in False Claims Act Qui Tam Actions

This article was written by Jason Kanterman and Samuel Truesdell.

The Supreme Court recently granted a petition for certiorari in United States ex rel. Polansky v. Executive Health Resources, a case in which the Court has been asked to decide (1) whether the federal government has the authority to dismiss an action filed by a relator under the False Claims Act’s qui tam provisions where the Government declines intervention, and (2) if the Government does have such authority, what standard courts must apply when adjudicating such dismissal requests.[1] This issue has long drawn significant attention from the Government, the defense bar, and the relator’s bar, and the Court’s apparent willingness to resolve longstanding circuit splits on both questions has significant implications for all participants in the False Claims Act and Government contracting space.

Thus far, circuit courts have devised at least four different standards to evaluate Government-initiated motions to dismiss qui tam actions—likely one reason the Supreme Court has decided to weigh in on the subject. Some circuits are highly deferential to the Government’s ability to dismiss. For example, in the D.C. Circuit, the Government has "an unfettered right to dismiss an action."[2] The First Circuit generally agrees with the D.C. Circuit but does permit judicial review of Government motions to dismiss in cases where a relator can demonstrate that the Government has perpetrated a "fraud on the court" or "transgress[ed] constitutional limitations."[3] Some circuits are more willing to entertain disputes as to the Government’s dismissal authority as cases age. For example, the Third and Seventh Circuits treat Government-initiated motions to dismiss as motions for voluntary dismissal under Federal Rule of Civil Procedure 41(a), meaning that they will entertain argument on the Government’s right to dismiss if the defendant has already responded to the complaint or filed a motion for summary judgment before the Government seeks dismissal.[4] Finally, the Ninth and Tenth Circuits conduct a more searching inquiry regardless of when the Government’s dismissal request is filed, evaluating whether the Government has identified a "valid Government purpose" and demonstrated "a rational relation between dismissal and the accomplishment of that purpose."[5]

There is also disagreement amongst the federal circuit courts as to whether the Government must intervene before exercising its authority to dismiss. For example, the Third, Sixth, and Seventh Circuits all require the Government to intervene to dismiss a qui tam suit.[6] The D.C. Circuit and Tenth Circuit do not.[7] And the First and Ninth Circuits have not yet decided whether the Government must intervene before dismissing but have signaled that the Government likely need not do so.[8]

In Polansky, the relator brought suit to recover money that the defendant billed to the Government for inpatient hospital stays that allegedly should have been provided as outpatient services.[9] The Government investigated but declined to intervene.[10] The relator proceeded with the case notwithstanding the Government’s declination. Five years later, after the relator successfully defended against the defendant’s motion to dismiss and the parties began discovery, the Government moved to dismiss Polansky’s suit.[11] The Government justified its motion to dismiss on the need to preserve litigation resources and attorneys’ time.[12] The district court granted the Government’s motion and the relator ultimately appealed.

On review, the Third Circuit ruled that the Government must intervene before moving to dismiss.[13] However, the court interpreted the Government’s motion to dismiss as a combined motion to intervene and dismiss.[14] From there, the court determined that Rule 41 governed its analysis, and after conducting such an analysis, it ultimately affirmed the trial court’s order dismissing the action.[15]

Polansky’s petition for a writ of certiorari argues that the Third Circuit’s ruling should be reversed because "the Government lacks any . . . dismissal authority after initially declining to intervene[.]"[16] Polansky argues that the Government may only intervene after initially declining to do so without "limit[ing] the relator’s status and rights" and argues that this includes "the right to conduct the action."[17] While Polansky’s petition does not advocate for the Court to adopt any particular standard to review Government motions to dismiss qui tam actions, it is likely the Court will have to identify an applicable standard when deciding this case.[18]

Defendants have long sought to convince the government to dismiss relator-brought actions so as to avoid protracted litigation expenses and potential liability. The Supreme Court’s decision in this matter will color how successful those strategies are likely to be in the future and should be watched closely.