In its recently concluded term, the US Supreme Court addressed the government’s authority to dismiss False Claims Act lawsuits brought on its behalf by relators or whistleblowers in which the government has initially declined to intervene. issued its decision in.,
United States, ex rel. Polansky v. Executive Health Resources clarifies the government’s authority to dismiss under such circumstances, providing the government a useful—albeit limited—tool to dispose of meritless FCA suits.
But it is likely that the court’s most significant FCA decision this term was one that it declined to make—resolving the growing circuit split on the application of Fed. R. Civ. P. 9(b).
The court’s ruling on the government’s dismissal authority could have a modest effect on purging meritless FCA cases, but a decision articulating Rule 9(b)’s pleading requirements would have more meaningfully curtailed the cadre of relators who make a practice of bringing frivolous cases.
The split can be seen in, for example, United States ex rel. Nargol v. DePuy Orthopaedics, holding that relators must “allege the essential particulars of at least some actual false claims that were submitted,” and United States ex rel. Prather v. Brookdale Senior Living Cmtys., requiring “the pleading of representative false claims … while recognizing that a relator may nonetheless survive a motion to dismiss by pleading specific facts based on her personal billing-related knowledge.”
By denying certiorari in Johnson v. Bethany Hospice and Palliative Care, the Supreme Court held off on resolving the split.
Circuit Split Before Polansky
Before the high court’s decision, the circuit courts of appeals had adopted an array of approaches to the government’s dismissal authority:
- The D.C. Circuit had afforded the government an unfettered right to dismiss
- The Ninth and Tenth Circuits required the government to show a rational reason for the dismissal
- The Seventh Circuit determined that the government must intervene in the case and the dismissal should be evaluated under Fed. R. Civ. P. 41
- The First Circuit required the government to state the reasons for dismissal which will be granted unless relator can show that the government is “transgressing constitutional limitations or perpetrating a fraud on the court.”
In accordance with the Supreme Court’s decision, the government will need to first intervene in the action—showing that it has a legitimate, legally sufficient reason to do so—and then move to dismiss in accordance with Rule 41’s standards which “will be readily satisfied.”
As long as “the Government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grant the motion [to dismiss].”
The government’s exercise of dismissal authority in appropriate instances serves judicial economy and a litigant’s rights to own its claims. As the DOJ explained in a public memorandum, known as the Granston Memo, “[e]ven in non-intervened cases, the government expends significant resources in monitoring these cases .... If the cases lack substantial merit, they can generate adverse decisions that affect the government’s ability to enforce the FCA.”
But the benefits can extend well beyond DOJ and relieve its agency clients, named defendants, third party witnesses, and the courts of the massive costs associated with litigating otherwise meritless matters.
The Limits of the Polansky Ruling
Despite these benefits, DOJ has, in many cases, abdicated this dismissal authority to curry favor with the relators’ bar. Some US Attorney’s Offices even allow meritless claims to proceed to avoid the perception that their jurisdiction is hostile to FCA claims. Thus, even when Main Justice wants to flex this dismissal muscle, it can face resistance from its USAO partners.
As such, even though Main Justice has pushed to use this authority more often following the Granston Memo, DOJ still moves to dismiss a relatively small percentage of cases, and a large portion of the dismissals are cases brought by pro se litigants that don’t impact the relators’ bar.
In reality, DOJ dismisses cases where the internal motivations for dismissal, whatever they may be, trump external messaging concerns, or where external messaging could be problematic for DOJ or its agency clients. In practice, this approach enables the government to articulate in its motions to dismiss a logic that would satisfy the most stringent pre-Polansky dismissal tests, thereby limiting the impact of Polansky.
While it was considering whether to grant certiorari in Polansky, the court had an opportunity to address a circuit split that would have had a far more dramatic effect—the Rule 9(b) standard and whether relators and the government must identify specific claims in their complaints.
Some circuits require a plaintiff to plead specific examples of fraudulent claims to survive a motion to dismiss, while others allow cases to proceed without specific examples if the complaint included reliable indicia of potentially fraudulent claims.
Regrettably, the court chose not to resolve the Rule 9(b) issue, leaving in place the uncertainty in the lower courts. In establishing a more definitive and stringent application of Rule 9(b), the Supreme Court could do what DOJ should be doing—eliminate meritless cases from district court dockets.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Christopher Michel, Michael Shaheen and Kristin Tahler are partners at Quinn Emanuel Urquhart & Sullivan.
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