On June 16, 2023, the United States Supreme Court, in an 8-1 split decision, ruled that the government, after initially deciding not to meddle in a False Claims Act (FCA) qui tam case, can intervene by demonstrating good cause. It also subsequently moved to dismiss the case over the objections of the qui tam relator if the Government satisfies the “good cause” requirements enshrined in Rule 41 of the Federal Rules of Civil Procedure (FRCP). The majority of justices agreed with the dissenting judgment of Justice Thomas that there are constitutional issues related to qui tam actions that need to be addressed appropriately.
Shedding Light on the Operation of the FCA
Many people will fall into the trap of the FCA for submitting false or fraudulent claims for payment to the government. Additionally, the FCA allows private parties to file lawsuits on the government’s behalf. These qui tam suits solely allege harm to the government. However, the relator can receive up to 30 percent of the recovered damages.
According to the procedure, the qui tam relator initiates the lawsuit under seal, and the government has a 60-day ultimatum to choose whether to intervene and take over the action. If the government intervenes during this period, it will conduct the suit. If not, the relator can proceed with the action.
However, if the government holds back, it is still a “real party in interest” and retains certain rights, such as intervening later if it demonstrates good cause.
The Matter at Hand
In this instance, however, Jesse Polansky, the relator, initiated a qui tam lawsuit claiming that Executive Health Resources (EHR) assisted hospitals in overbilling Medicare. The government decided not to intervene during the seal period, resulting in the case spending copious years in the discovery phase.
The government eventually deemed the case not valuable and not worth investing its time in. Consequently, it submitted a motion of dismissal under 31 USC §3730©(2)(A). This Subparagraph empowers the government to dismiss the action without recourse to the relator’s objection. So far, it has informed the relator and offered them an opportunity for a hearing.
The United States District Court approved the government’s request after establishing that the Government had comprehensively evaluated the costs and merits before deciding. The Third Circuit Court of Appeals upheld this decision after addressing two questions,” observed whistleblower attorney Bill Nettles of The Law Office of Bill Nettles.
The Posers That Informed the Court’s Decision
First, does Subparagraph (2)(A) empower the Government to dismiss an action if it stayed away during the seal period?
The court ruled that the Government had the power, especially if it eventually intervened. In this scenario, the court decided that the Government met this requirement because its motion to dismiss was reasonably interpreted to include a motion to intervene, which the District Court had implicitly approved.
Secondly, what yardstick should a district court apply when deciding on a Subparagraph (2)(A) motion?
The court concluded that the reasonable criteria emanate from Section 41(a) of the Federal Rules of Civil Procedure (FRCP), which focuses on voluntary dismissals in standard civil cases. Subsequently, the court upheld the District Court’s decision, insisting the lower court did not misuse its discretion in approving the Government’s motion.
Addressing the Constitutional Concerns from the Ruling
The President, including those under his authority, exercises executive power. Congress, via legislation like the FCA, cannot support a private individual acting on behalf of the Government in civil litigation. This raises doubts about whether Article II permits private individuals to represent the Government’s interests in FCA cases.
Even if this is valid, the consequences might not be as explicitly straightforward as they appear to be. Under the FCA, the relator sues for both himself and the Government, implying a partial assignment. It is unclear whether the Government can dismiss the relator’s interest in a qui tam suit, even if its role is unconstitutional.
The concerned parties and the lower court should address these challenging issues explicitly after resolving the statutory matters central to this case. Again, most justices also aligned with Thomas’s dissenting opinion that there are strong arguments against the qui tam mechanism under Article II.
This suggests that private individuals may not represent the United States in litigation. Due to their substantial implications, the court should address these arguments adequately in the future.
Conclusion
Although the Supreme Court is the highest in the country, its ruling on this salient has expectedly caused some intellectual debates. Several constitutional concerns about this ruling favored the Government. There is no gainsaying that this ruling has altered several affairs in the criminal defense system.
Media Information:
Bill Nettles
2008 Lincoln St, Columbia SC 29201
(803) 590-7471
