The US Supreme Court recently affirmed the dismissal of a whistleblower suit that accused Executive Health Resources Inc. of violating the False Claims Act (FCA) by improperly billing Medicare. The court ruled in an 8-1 decision that the Justice Department (DOJ) had the authority to seek dismissal of an FCA action even over the whistleblower’s objection, as long as the government had intervened in the litigation at some point.
The case revolved around whistleblower Jesse Polansky, who argued that the appeals court erred in backing the DOJ because the government failed to properly intervene before moving for dismissal. However, the Supreme Court concluded that the government’s intervention at any stage of the litigation, whether at the outset or later, permitted it to seek dismissal. Justice Elana Kagan, writing for the majority, emphasized that district courts should apply the general rule governing voluntary dismissal of suits, as outlined in Federal Rule of Civil Procedure 41(a).
Joining Justice Kagan in the majority opinion were Chief Justice John G. Roberts Jr., Justice Samuel A. Alito, Justice Sonia Sotomayor, Justice Neil M. Gorsuch, Justice Brett M. Kavanaugh, Justice Amy Coney Barrett, and Justice Ketanji Brown Jackson. Justice Kavanaugh filed a concurring opinion, which Justice Barrett joined. However, Justice Clarence Thomas dissented, expressing concerns about the constitutionality of the FCA’s whistleblower provisions.
Legal experts have weighed in on the implications of the Supreme Court’s decision. Alex Hontos, representing FCA defendants with Dorsey & Whitney LLP, described the ruling as unfavorable for qui tam plaintiffs, suggesting that the DOJ may now move to dismiss more unmeritorious or burdensome claims. Debra Schreck, representing FCA defendants with Arnold & Porter Kaye Scholer LLP, emphasized the importance of allowing the government to rein in meritless qui tam cases to protect the government’s interests.
Stephen Hasegawa, who represents whistleblowers with Phillips & Cohen, highlighted that the decision requires the government to show good cause for intervention and explain why dismissal serves its interests if it wishes to dismiss an FCA case later. However, Hasegawa also noted that questions concerning due process and equal protection rights for whistleblowers may arise and be litigated in the future.
The whistleblower suit brought by Jesse Polansky alleged that Executive Health, a subsidiary of UnitedHealth Group Inc., violated the FCA by wrongly billing Medicare for medical services at inpatient rates instead of outpatient rates. The US government moved for dismissal, citing the potential burdens on government resources and litigation costs if the case continued. The District Court for the Eastern District of Pennsylvania granted the government’s motion in November 2019, and the Third Circuit Court of Appeals affirmed the dismissal in October 2021.
The Supreme Court’s decision supports the government’s authority to dismiss a pending whistleblower action, even after initially declining to take over the action. It underscores the government’s ability to reassess the merits of whistleblower cases and make decisions based on the interests and costs involved. While dissenting, Justice Thomas raised concerns about the government’s power to unilaterally dismiss a whistleblower action and questioned the constitutionality of the FCA’s whistleblower provisions.
As the impact of this decision unfolds, it is likely to shape the dynamics of future whistleblower cases and the role of the government in intervening and seeking dismissal. The Supreme Court’s ruling brings clarity to the dismissal process under the FCA, while leaving open the potential for further legal challenges on issues of due process and constitutional rights for whistleblowers.
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