The FCA imposes liability on those who defraud the government, specifically those who “knowingly” present a false claim for payment or records and statements material to a false claim. The qui tam provision of the FCA encourages private whistleblowers (relators) to file suit while allowing the government to intervene and take control. The qui tam provision is often debated. Some argue it serves as a check against government corruption, but others believe it allows for meritless litigation, drains judicial resources and imposes undue costs on defendants and the government, which is forced to participate in discovery even when it declines to intervene. Health care companies, as frequent FCA targets, have a particular interest in the outcome of these issues.

Does the government retain dismissal authority after it declines to intervene?

In 2012, Dr. Jesse Polansky, a consultant for Executive Health Resources, a company that assists hospitals in submitting bills to the government for Medicare-covered services, filed an FCA suit alleging the company was over-designating claims as inpatient rather than outpatient in violation of Centers for Medicare and Medicaid Services (CMS) regulations. The government investigated for two years but declined to intervene. Undeterred, Dr. Polansky pursued the case. In 2019, the government moved to dismiss the case, over Dr. Polansky’s objection. The district court granted the motion and the Third Circuit affirmed.

The Supreme Court heard arguments as to whether the government retains authority to dismiss an FCA case after declining to intervene and, if so, what standard applies to the dismissal. Dr. Polansky argues that the history, structure and text of the statute (in particular, section 3730(b)(4)) give the government a binary choice to take over the action or decline to do so, and, if the government declines, then the relator has an exclusive right to pursue the action. Dr. Polansky argues the portion of the statute cited by the government for its dismissal authority is inapplicable because it applies only when the government elects to intervene. To the extent the Court finds the government retains authority to dismiss, Dr. Polansky argues that right is not unfettered. Dr. Polansky urges the Court to impose a rational review standard whereby the government must demonstrate that dismissal will achieve a valid government objective because the relator has a property interest in his cause of action such that any right to dismiss arbitrarily violates due process.

The other side maintains that the FCA allows the government to dismiss a qui tam suit at any time. According to the respondent, depriving the government of dismissal authority would render the statute unconstitutional because the Constitution places all executive power in the U.S. president and prosecuting fraud against the government is an executive function. It argues this authority is not subject to any standard of judicial review, because the president has complete prosecutorial discretion. The respondent denies that a relator has any due process rights because he does not have a property interest in his claim unless and until he prevails.

The Court’s ruling could impact the incentive for a qui tam relator to pursue his claim after the government declines to intervene, as well as the balance of power between qui tam relators, the government and defendants. A decision is expected later this year.