The Supreme Court Confirms the Government’s Essentially Unfettered Authority to Dismiss False Claims Act Cases

On Friday, June 16, 2023, I (sort of) lost my bet that the Supreme Court would follow the path charted in Borzilleri v. Bayer Healthcare Pharmaceuticals, 24 F.4th 32 (1st Cir. 2022) to determine the government’s False Claims Act (FCA) dismissal authority. See previous blog post. Last fall I predicted that the Supreme Court would confirm the government possesses essentially unfettered discretion to dismiss an FCA case over a relator’s objection, subject to constitutional constraints. 

Instead, in U.S. ex rel. Polansky v. Executive Health Resources, 599 U.S. __ (2023), the Court affirmed the Third Circuit’s holding that the United States may move to dismiss an FCA action over the relator’s objection so long as the United States first intervenes to do so (with the motion to dismiss sufficient) and the dismissal complies with Federal Rule of Civil Procedure 41(a).

The Court thus answered two questions that had divided courts around the country: (1) When the government must or may dismiss an FCA action; and (2) What the government must demonstrate to do so.  

As to the first, Justice Kagan, writing for the majority, dismantled the FCA’s text to confirm what was there all along, the provision in which the government’s dismissal authority rests assumes that the government has intervened in the action. That is, the FCA sets forth the rights of the parties in three situations – when the government intervenes, when it does not, and whether or not it has intervened. The FCA explicates these three scenarios in four paragraphs, making the fourth (actually second) paragraph’s place seem unclear. But the text of the first paragraph, which describes the parties’ rights when the government intervenes, clearly links the second paragraph to it: Paragraph 1 is “subject to” the limitations prescribed in Paragraph 2. Thus, the government must first intervene in the action – so that it is a party to it – before dismissing it. 

As to the second, alighting on Rule 41 as the “legally right” “Goldilocks position,” the Court stated the “Federal Rules are the default rules in civil litigation and nothing warrants a departure from them here.” Polansky, Slip Op at 14. The FCA, however, requires more than Rule 41. There must be notice and opportunity for a hearing. And the court must consider the relator’s interests. But as I predicted, the Supreme Court has now held that those interests don’t count for much.  

Approving the Third Circuit’s conclusion that the government’s dismissal motion “will satisfy Rule 41 in all but the most exceptional cases,” the Court noted the government’s views in this context “are entitled to substantial deference.” Id. at 15. According to the Court, if “the government offers a reasonable argument for why the burdens of continued litigation outweigh the benefits, the court should grant the motion. … even if the relator presents a credible assessment to the contrary.” Id. at 16. And wrote Justice Kagan, “a district court should think several times over before denying a motion to dismiss.” Id

Justice Thomas, alone, dissented. In his view, the FCA’s structure permits the government to only intervene (or not) during the seal period, and thus, once the government elects its option it cannot later decide to intervene for the purpose of dismissing the suit or for any other reason.  

But not content with that result, Justice Thomas concluded that he would remand the case to the Third Circuit to consider a question not yet before it – whether the Constitution nonetheless commands dismissal of the relator’s suit, even though the government failed to dismiss it during the seal period. Justice Thomas then presented his view that the FCA provision permitting a relator to maintain a suit in the name of the government in which the government has not intervened may be inconsistent with Article II of the Constitution. Justice Thomas argues that the historical roots of the modern day FCA, which run deeper than even this country’s founding, would not justify its continuance if it is unconstitutional. The FCA’s history is beyond the scope of this post, but his point has some support. Indeed, Justices Kavanaugh and Barrett separately concurred to state that they would like to see the Court review the question of whether the qui tam statute is consistent with Article II in an appropriate case.  

Let’s see what happens next Supreme Court term. 

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

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Sara Alpert Lawson
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As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.