On December 6, 2022, the Supreme Court heard oral argument in United States ex rel. Polansky v. Executive Health Resources, Inc. As previously reported, this case raises whether the government has the authority to dismiss a False Claims Act (FCA) qui tam suit after it initially declined to proceed with its own action and, if so, what dismissal standard applies.

Background

Polansky alleged a healthcare consulting company caused millions of dollars of false bills to be submitted to Medicare. The government declined to intervene, but Polansky – as is his right under the FCA – proceeded with the lawsuit himself. After several years of litigation, however, the government sought to force dismissal of the case. The district court and court of appeals agreed that the government could do so. Polansky appealed, and in June the Supreme Court agreed to hear the case.

Supreme Skepticism

At oral argument, lawyers for Polansky took an aggressive position, arguing that once the government declined to intervene in an FCA suit, it thereafter lacked any authority to dismiss the suit. That argument appeared to gain little traction, as the justices expressed separation-of-powers concerns that could result from such a limitation on the government’s authority, among other concerns. Several justices noted that the FCA’s text still allows the government to intervene after initially declining if the government has good cause. They questioned why the government’s dismissal authority would be narrower at that point than if the government had initially intervened, especially since circumstances could change causing the government to reconsider its initial decision.

What’s the Standard?

While the Court appeared unlikely to restrict the government’s dismissal authority entirely, less clear was what standard applied when the government did move to dismiss. Polansky emphasized that a qui tam plaintiff had a property interest in the lawsuit, which heightened the showing the government must make to dismiss the lawsuit. While Polansky still characterized that as a “rational basis” test – a typically very easily satisfied standard – Justice Gorsuch noted it was a “pretty aggressive version” of that test since “[n]ormally when we invoke rational-basis review, it’s pretty cursory, pretty quick, and the government always wins.”

The government argued that the FCA’s text provides no dismissal standard, so the applicable standard had to come from the Constitution. It agreed that a typical rational basis test, as used by the Court in other contexts, should apply. While the justices did not appear to agree on a specific standard, they all seemed to envision a fairly low bar.

Practical Implications

In 2018, DOJ issued the Granston Memo, which outlined the factors the government would consider in moving to dismiss FCA cases and generally signaled DOJ’s greater willingness to dismiss such cases. And as expected, in the years that followed, DOJ has moved to dismiss a greater number of FCA lawsuits. The litigation that followed, including most recently here in Polansky, has centered on courts’ different interpretations of the dismissal standard. The Court’s decision – expected in mid-2023 – should provide a uniform standard and greater consistency across the circuits. Based on the oral argument, however, it does not appear that the Polansky decision will mark a major change in the general authority DOJ has to dismiss FCA claims.