SCOTUS to Consider the Applicable Standard when the Government Seeks Dismissal of a False Claims Act Suit After Declining to Intervene

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In United States, ex rel. Jesse Polansky, M.D., M.P.H., Petitioner v. Executive Health Resources, Inc., et al., the Supreme Court will decide whether the government has authority to dismiss a False Claims Act suit after initially declining to intervene, and what standard applies if the government has that authority.

The False Claims Act (FCA), 31 U.S.C. 3729 et seq., provides civil liability for those that knowingly defraud the federal government, and permits a private party (known as a “relator”) to file a qui tam lawsuit under seal “in the name of the Government.”  The petitioner, a doctor consultant, filed a qui tam FCA suit in 2012, alleging that the respondent, a physician advisor company that provides review and billing certifications to medical providers that use Medicaid, was fraudulently billing the government for inpatient services that should have been certified as out-patient services.  When a qui tam complaint is filed, after investigating the allegations, the government may “elect to intervene and proceed with the action.”  If the government declines to intervene, the relator may proceed with the litigation, but the government remains a real party in interest. 

The government investigated the claims for two years before declining to intervene. The litigation then continued for several more years until 2019, when the government filed a motion to dismiss the action under 31 U.S.C. § 3730(c)(2)(A), which provides that “[t]he Government may dismiss the action notwithstanding the objections of the [relator] if the [relator] has been notified by the Government of the filing of the motion and the court has provided the [relator] with an opportunity for a hearing on the motion.”  The United States District Court for the Eastern District of Pennsylvania granted the government’s motion to dismiss of the Relator’s objections, finding it “sufficiently reasoned and supported.”  The Third Circuit affirmed the dismissal.

In granting certiorari, the Supreme Court is set to resolve a circuit split on what standard should apply when the government seeks dismissal under 31 U.S.C. § 3730(c)(2)(A).  The Court will hear arguments this fall.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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