On September 12, 2019, the United States Court of Appeals for the Third Circuit ruled that courts are not required to provide a qui tam relator with an in-person hearing when the government seeks to dismiss a lawsuit under the federal False Claims Act (FCA). The Third Circuit’s opinion in United States and Delaware ex rel. Chang v. Children’s Advocacy Center of Delaware, No. 18-2311 (3d Cir. 2019), marked “precedential” by the Court, provides further guidance on the scope of relators’ statutory right to “an opportunity for a hearing” under 31 U.S.C. § 3730(c)(2)(A).
After the United States declines to intervene in a pending qui tam FCA case, it may seek dismissal of the action “notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.”
In Chang, which included claims under the FCA and its Delaware analog, both governments declined to intervene. Afterward, the United States and Delaware each moved to dismiss the case, reporting that they found relator’s allegations to be “factually incorrect and legally insufficient.” Relator failed to request a hearing, and the district court granted the motions without conducting an in-person hearing.
On appeal, and based on relator’s protest, the Third Circuit faced the question of whether the FCA guarantees an automatic in-person hearing for a relator before granting the government’s motion to dismiss. Various Courts of Appeal have handled the question differently.
The Ninth and Tenth Circuits have held that courts have approval authority over governmental dismissal attempts. In those Circuits, the courts will review whether the government has a valid governmental purpose and whether the dismissal has a rational relationship to that purpose before shifting the burden to the relator. Meanwhile, the D.C. Circuit has held that the United States has an “unfettered right” to dismiss a relator’s case. In Chang, the Third Circuit noted that it need not choose sides in the circuit split because relator’s arguments would fail under even the most restrictive view. The Court ruled that, where a relator fails to request a hearing, the court is not required to schedule and hold an in-person hearing on its own volition. The Third Circuit noted that, while the FCA does provide an “opportunity” for a hearing, relators must take steps to “avail themselves of the ‘opportunity.’” Because the relator did not in this instance request a hearing, the court correctly dismissed the action at the United States’ and Delaware’s request.
The full opinion in United States and Delaware ex rel. Chang v. Children’s Advocacy Center of Delaware can be found here.
