The False Claims Act (FCA) saw quite a bit of action at the Supreme Court in its most recent completed term. In this fourth and final installment of PilieroMazza’s blog series “The FCA at the Supreme Court,” we examine active cases, comment on recently issued decisions, and offer key takeaways to help government contractors protect their business assets against an FCA claim or in FCA litigation. Please visit these links for Part 1, Part 2, and Part 3.

In the first installment of this series, we wrote about United States ex rel. Polansky v. Executive Health Resources, Inc.  The case addresses the government’s broad authority to obtain dismissal of qui tam cases that the Department of Justice (DOJ) determines are not in the best interests of the government to pursue. This blog will reference that case.

Background on the Government’s Dismissal Authority

The qui tam provision of the FCA, 31 U.S.C. § 3730(c)(2)(A), states “the Government may dismiss [a qui tam action filed by a whistleblower] notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion [to dismiss] and the court has provided the person with an opportunity for a hearing on the motion.”  This clause was added to the FCA via Congress’ 1986 amendments.  Since 1986, federal courts around the country have struggled with how to implement it.  Some courts favored an approach granting the government broad, unfettered discretion to dismiss a qui tam action.  Other courts required the government to identify a valid government purpose and a rational relationship between dismissal and the accomplishment of that purpose.

On January 10, 2018, Michael Granston—then-director of the Commercial Litigation Branch, Fraud Section of the DOJ—issued a Memorandum to DOJ Fraud Section attorneys discussing factors to be considered in seeking dismissal of qui tam suits.  The “Granston Memo,” as it came to be known, noted that, historically, DOJ “sparingly” used its dismissal authority.  However, the Granston Memo implied that the rise in qui tam actions would lead to a larger number of government dismissals.  Following the issuance of the Granston Memo, DOJ attorneys sought dismissal of qui tam actions more often, relying on factors such as curbing meritless qui tam suits, preserving government resources, and preventing “parasitic” or “opportunistic” qui tam actions.

Background on the Polansky Case

Dr. Jesse Polansky provided Medicare and Medicaid consulting services for Executive Health Resources (EHR), which provides billing assistance to hospitals that bill Medicare. During his time at EHR, Polansky found that it systematically assisted hospitals in admitting patients for inpatient procedures that could be provided as an outpatient. This resulted in hospitals billing the government for care that would not be considered “reasonable and necessary,” as required by Medicare and Medicaid regulations.

Polansky filed a qui tam action against EHR in 2012 alleging it provided false Medicare billing certifications, resulting in the submission of false claims for payment from the government. Two years later, the government ultimately decided it would not participate in the case and declined to intervene.  However, in 2019, after Polansky invested around $20 Million in pursuing the case, the government determined that “the varied burdens of the suit[,]” such as ongoing discovery obligations, “outweighed [the suit’s] potential value.”  Thus, the government moved to dismiss pursuant to its statutory dismissal authority.

The district court sided with the government and dismissed the case, finding that the government “thoroughly investigated the costs and benefits of allowing [Polansky’s] case to proceed and ha[d] come to a valid conclusion based on the results of its investigation.” The Third Circuit affirmed.  It determined that:

  1. the government had the power to dismiss a qui tam action so long as it intervened in the litigation at some point;
  2. the government’s motion to dismiss was reasonably construed to include a motion to intervene, which the district court implicitly granted;
  3. the standard for dismissing FCA cases falls under the Federal Rule of Civil Procedure 41(a) standard for voluntary dismissal; and
  4. in light of the district court’s analysis, the decision to dismiss was not an abuse of discretion.

Polansky petitioned the Supreme Court for review, and they granted certiorari.

The Supreme Court Decision

In a majority opinion by Justice Elena Kagan, the Supreme Court affirmed the Third Circuit’s decision.

First, the Court concluded that the government has the right to seek dismissal of a qui tam suit so long as it intervenes in the litigation at some point.  The government need not intervene at the outset of the case.  The language of the FCA permits it to do so at any time on a showing of “good cause.”  And, if the government does intervene, it takes the lead in the litigation.  Accordingly, the Court concluded, if the government intervenes—no matter when that intervention takes place—it may seek dismissal under the statute.

Second, the Court determined that, after intervention, the government’s authority to dismiss a qui tam suit should be considered under Federal Rule of Civil Procedure 41(a), the rule that governs voluntary dismissals in ordinary civil litigation.  Under that standard, if the defendant has not yet served an answer or motion for summary judgment, the plaintiff (or in this instance, the government) need only file a notice of voluntary dismissal with the district court.  After an answer or motion for summary judgment has been filed, however, a dismissal requires a court order on terms that the court considers proper.  The Court noted: “in most FCA cases, . . . those standards will be readily satisfied.”

The Court went on to explain that, although Rule 41 provides a sound framework, additional considerations must be made in FCA cases.  Specifically, FCA dismissal is only appropriate after the relator is given notice and an opportunity for a hearing.  In addition, the Court determined that a district court must consider the relator’s interests, including the commitment of financial resources.  Ultimately, if “the Government offers a reasonable argument for why the burdens of continuing litigation outweigh its benefits, the court should grant the motion.  And that is so even if the relator presents a credible assessment to the contrary.”

The Dissent

Justice Clarence Thomas offered a dissenting opinion that is sure to cause future controversy.  Justice Thomas explained that “[t]he FCA’s qui tam provisions have long inhabited something of a constitutional twilight zone.”  In Justice Thomas’ view, litigating on behalf of the United States is a uniquely “executive functio[n]” which may be discharged only by “Officers of the United States” under Article II of the Constitution.  Against this backdrop, Justice Thomas opined that it appears “Congress cannot authorize a private relator to wield executive authority to represent the United States’ interests in civil litigation.”  In other words, a relator may only be permitted to advance a qui tam action to pursue the relator’s individual interests, but it could not advance the government’s interests.

In an opinion concurring with the majority decision, Justice Brett Kavanaugh, joined by Justice Amy Coney Barrett, agreed with Justice Thomas that “[t]here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.”  Justice Kavanaugh encouraged the Court to consider the Article II issue in an appropriate case.

Key Takeaways

  1. Good News for Government Contractors. The Polansky decision was a generally favorable one for contractors (or defendants in an FCA case). The decision bolsters the government’s ability to seek dismissal of qui tam suits and acknowledges that it would be rare to deny the government’s motion to dismiss.  A contractor may be able to use Polanksy to encourage the government to seek dismissal by identifying extensive discovery to which the government may be forced to respond if the case is not dismissed or other policy issues that may be impacted by the suit.  While ultimately the government decides whether to seek dismissal, some defendants may be successful in advocating for dismissal behind the scenes, particularly if they can identify why it is not in the government’s best interests to permit a qui tam suit to continue.
  2. Creating Consistency in the Standard for Dismissal. The Supreme Court, in holding that Federal Rule of Civil Procedure 41(a) is the applicable standard, resolved an inconsistency across circuit courts as to the standard of government-requested dismissal in FCA cases. This standard is low and its utilization will result in the dismissal of most FCA cases where the government requests it.
  3. Future FCA Litigation and Qui Tam Relators. Relators have a vested interest in preventing dismissal of their qui tam They may have invested millions of dollars in attorneys’ fees or expert witness costs and countless hours of personal time, leaving them with nothing to show for it.  Given the Polanksy decision, look for relators to try to prevent the government from intervening late (i.e., after the government initially declined to intervene), such as arguing that the government does not have good cause to intervene.  If the relator can block the government’s intervention (a tall order), the relator could prevent the government from seeking dismissal of the action.
  4. The FCA is Likely to Return to the Supreme Court in the Not-So-Distant Future. While the Polansky decision did not address the Article II issue raised by Justice Thomas’ dissent, two members of the Court’s majority telegraphed their desire to have the Article II issue briefed in the appropriate case.  A case is accepted for Supreme Court briefing and argument if four Justices vote to grant a petition for certiorari.  With Justice Thomas’ dissent, and Justice Kavanaugh’s and Justice Barrett’s agreement that the issue should be reviewed, those three Justices may have identified the next major FCA case to reach the highest Court.  That case could be a blockbuster in a future term.

If you have questions about how the Polansky decision impacts your business or other FCA-related matters, please contact Matt Feinberg, Annie Hudgins, or another member of PilieroMazza’s False Claims Act or Audits & Investigations teams.


Looking for practical insights on gaining a competitive advantage through a deeper understanding of the government’s compliance requirements? Check out PilieroMazza’s podcasts “GovCon Live!” and “Clocking in with PilieroMazza.