Key Takeaways

• The Supreme Court affirmed the Department of Justice’s (DOJ) authority to seek dismissal of False Claims Act (FCA) cases brought by private relators even when the DOJ initially declined to intervene.
• The Court also ended the circuit split by holding that Rule 41(a) is the standard for the DOJ to seek dismissals of qui tam suits.
• Three justices signaled willingness to review the constitutionality of the FCA’s qui tam provisions that enable private whistleblowers to bring actions.

On June 16, 2023, the United States Supreme Court issued an 8-1 decision in the case of United States, ex rel. Polansky v. Executive Health Resources, Inc., which held that the Department of Justice (DOJ) can move to dismiss a whistleblower action at any time, including after it has made a decision to intervene. The Court also determined that when a whistleblower objects to a DOJ motion to dismiss, trial courts should apply the rule generally governing voluntary dismissals of suits in ordinary civil litigation.

The Government’s Options in ‘Qui Tam’ Cases Under the FCA

The False Claims Act’s (FCA) qui tam provisions enable private citizens to “blow the whistle” and file lawsuits on behalf of the United States government based on allegations that a person has presented a false claim to the government for payment. Such whistleblowers are known as “relators,” and the FCA incentivizes qui tam complaints by rewarding them with large shares of the funds ultimately recovered in successful FCA actions.

Qui tam actions are initially filed under seal. Upon filing, the relator must give the DOJ’s Civil Division an opportunity to investigate the allegations while the action remains under seal. After the DOJ investigates, it can choose to either (1) intervene and take the case over, (2) decline to intervene, or (3) ask a federal court to dismiss the relator’s suit. When the DOJ chooses to decline intervention, relators are then free to continue litigating the allegations with their own lawyers, and successful relators who litigate declined cases are entitled to receive a larger share of the recovery and attorneys’ fees.

When deciding whether to intervene, the Justice Manual provides an inexhaustive list of factors the DOJ considers, including curbing meritless litigation, preventing duplicate actions, preventing interference with the administration of federal agencies, and preserving governmental resources.

The Majority Opinion Affirms the DOJ’s Ability to Dismiss ‘Qui Tam’ FCA Actions

In Polansky, the relator was a physician, Jesse Polansky, MD, who first filed a qui tam complaint in 2012 in the Eastern District of Pennsylvania. After investigating the relator’s allegations for over two years, the DOJ declined to intervene. Thus, Polansky continued the action with his own legal team, which continued to litigate for multiple years and accumulated a purported $20 million in attorney time and costs. In February 2019, the DOJ reevaluated Polansky’s case and decided that the government’s burdens from the action outweighed the potential value. Thus, the DOJ moved to dismiss, contending that 31 U.S.C. § 3730(c)(2)(A) gave it the right to seek dismissal even after it declined to intervene. The relator argued that the government extinguished its power to invoke § 3730(c)(2)(A) when the government declined to intervene. After both the district court and the U.S. Court of Appeals for the Third Circuit held the government could dismiss the action over the relator’s objection, the relator appealed to the Supreme Court.

In a near-unanimous opinion, the Supreme Court affirmed the DOJ’s ability to dismiss the relator’s case at any time, even after declining to intervene. The Court held that nothing in the text of § 3730 barred the DOJ from moving to dismiss after its initial decision not to intervene. Justice Kagan, writing for the majority, explained that “Congress decided not to make the seal-period intervention an on-off switch” because “it knew that circumstances could change and new information come to light. So Congress enabled the Government, in the protection of its own interests, to reassess qui tam actions and change its mind.” Slip op. at 13.

The Court then went on to resolve a circuit split over the standard that applies when the DOJ chooses to seek dismissal. The Supreme Court held that the government is to use the standard generally applicable under Federal Rule of Civil Procedure 41(a)(2) for the dismissal of civil actions filed after the defendant had answered. Under that rule, a relator can still object to a motion to dismiss from the DOJ. However, the Court noted, motions to dismiss under this standard “will satisfy Rule 41 in all but the most exceptional cases.” Justice Kagan also noted that this standard means federal trial courts “should think several times over before denying a motion to dismiss” because “[i]f the Government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grant the motion.” Id. at 15-16. Accordingly, the Court affirmed the Third Circuit’s dismissal of Polansky’s case.

The Dissent and Concurrence Question the Constitutionality of ‘Qui Tam’ FCA Actions

Justice Thomas issued the lone dissent. After concluding that the text, structure, and history of the FCA “affords the Government no statutory right to unilaterally dismiss a declined action when it intervenes,” Justice Thomas added that he would have also remanded the case to the Third Circuit to consider “serious constitutional questions that might affect the disposition of the Government’s motion here.” Slip op. at 7 (Thomas, J., dissenting). He described the FCA’s qui tam provisions as “inhabit[ing] something of a constitutional twilight zone” because of “substantial arguments” that a relator’s ability to represent the interests of the United States is “inconsistent” with Article II of the Constitution. The issue, to Justice Thomas, was whether Congress could authorize a private relator — who is not “appointed as an officer of the United States” under Article II of the Constitution — to “wield executive authority to represent the United States’ interests in civil litigation.” Id. at 8. Justice Thomas acknowledged that the constitutional question may not be this straightforward, but he wrote, “there is good reason to suspect that Article II does not permit private relators to represent the United States’ interests in FCA suits” and that the issue would benefit from further examination. Id. at 9.

Although they joined the majority opinion, Justices Kavanaugh and Barrett filed a brief concurrence agreeing with Justice Thomas’ suspicion regarding the constitutionality of the FCA’s qui tam provisions and suggesting that “the Court should consider the competing arguments on the Article II issue in an appropriate case.”

Conclusion

While this decision does not entirely foreclose a relator’s ability to overcome a motion to dismiss from the DOJ, it does provide the DOJ a clear path to end qui tam cases even after it declines to intervene. The decision confirms that no matter a relator’s involvement or investment in pursing allegations under the FCA, the United States remains the real party in interest with the authority over decisions seeking to vindicate its own interests. However, the questions raised in Justice Thomas’ dissent signal that there are at least three justices on the Court who are open to consider arguments about the constitutionality of the FCA’s qui tam provisions, and potentially to limit the ability of relators to file whistleblower suits under the FCA. We suspect his dissent will lead the FCA defense bar to raise a constitutional-based defense to qui tam cases, especially those where the DOJ declines to intervene.

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