On June 16, 2023, the Supreme Court (the “Court”) in United States ex rel. Polansky v. Executive Health Resources affirmed the federal government’s power to dismiss a False Claims Act (“FCA”) action brought under the qui tam provisions whenever it chooses to intervene. Polansky is the second FCA case this summer in which the Court has ruled in favor of the federal government—i.e., the Department of Justice, acting through the Attorney General (“DOJ”). Writing for an 8-1 majority, Justice Kagan explained that DOJ receives considerable deference, even over the objection of the individual who raised the action (i.e., the relator or whistleblower), to dismiss cases that are inconsistent with DOJ’s interests.

By way of background, in an FCA suit filed by a relator, DOJ has the right to intervene in the case, usually while the case remains under seal. If it intervenes, DOJ becomes the primary mover and, thus, may later move to dismiss the case. However, if DOJ declines to intervene, the relator may continue the case, but DOJ remains a party in interest. In Polansky, the relator (Dr. Jesse Polansky) filed a qui tam action against Executive Health Resources for allegedly submitting fraudulent claims to the Medicare program. While DOJ declined to intervene during the seal period, Dr. Polansky continued the case, which underwent years of discovery, requiring substantial amounts of documents and testimony from the federal government. By 2019, however, DOJ determined that the case’s burdens outweighed its potential value and, thus, moved to dismiss the case under 31 U.S.C. § 3730(c)(2)(A) (“Subparagraph (2)(A)”). DOJ’s motion was filed over Dr. Polansky’s objection that DOJ lacked dismissal authority.

The District Court granted the motion, determining that DOJ had reached a “valid conclusion based on the results of its investigation” to dismiss the case. The Third Circuit Court of Appeals affirmed the granting of the motion, holding that (1) a motion to dismiss implicitly is a motion to intervene, and (2) the standard to rule on a Subparagraph (2)(A) motion to dismiss comes from Federal Rule of Civil Procedure (“FRCP”) 41. After the Court granted review, DOJ argued that it possessed “essentially unfettered discretion to dismiss.” By contrast, Dr. Polansky advocated for an “arbitrary and capricious” standard of review.

The Court adopted neither parties’ standard, but rather affirmed the Third Circuit’s “Goldilocks position.” Justice Kagan explained that no departure from the FRCP was warranted—the standards outlined in FRCP 41 governed a request to dismiss under Subparagraph (2)(A). Justice Kagan further explained that applications of FRCP 41 in the FCA context differ in two respects from non-FCA cases. First, a dismissal under Subparagraph (2)(A) requires advance notice and an opportunity for hearing. District courts are therefore required to use this framework to apply FRCP 41. Furthermore, district courts must consider the interests of both the federal government and the relator as part of its analysis to determine whether a dismissal occurs on “proper terms.”

The Court’s decision may modestly reduce the number of qui tam actions in the future, although it is not expected to stem the growing wave that has emerged over the past decade. Despite such notable volume increase, the rate of intervention by DOJ has only negligibly changed. Recognizing DOJ’s right to intervene beyond the initial seal period, potential relators may be less likely to bring forth complaints, knowing that their efforts may result in a dismissal years after the complaint is initiated and after years of discovery and unrecoverable costs to both relators and their counsel.

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Special thanks to summer associate Brandon McCoy for his contribution to this post.

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Photo of Matthew J. Westbrook Matthew J. Westbrook

Matt Westbrook is an associate in the Corporate Department and a member of the Health Care Group. His practice focuses on providing regulatory compliance advice for the Firm’s health care clients, including service providers, health plans, operators, investors, and lenders, among others. Matt

Matt Westbrook is an associate in the Corporate Department and a member of the Health Care Group. His practice focuses on providing regulatory compliance advice for the Firm’s health care clients, including service providers, health plans, operators, investors, and lenders, among others. Matt specifically provides advice on fraud and abuse matters arising under the Federal False Claims Act (FCA), Civil Monetary Penalties Law, Federal Anti-Kickback Statute (AKS), and Physician Self-Referral Law (Stark Law), as well as on the regulations promulgated by the Drug Enforcement Administration (DEA) and the Department of Health and Human Services, including the Office of Inspector General (OIG), Centers for Medicare & Medicaid Services (CMS), and Food and Drug Administration (FDA).

Before joining the Firm, Matt served as senior counsel in OIG’s Administrative and Civil Remedies Branch. At OIG, Matt was responsible for determining whether to impose administrative sanctions, including civil money penalties and Federal health care program exclusions, against health care providers and suppliers, and whether to impose civil money penalties on hospitals and physicians in connection with matters referred to CMS under the Emergency Medical Treatment and Labor Act (EMTALA). During his tenure, Matt also litigated exclusion appeals before administrative law judges and appellate panels of the Departmental Appeals Board; advised United States Attorney’s Offices on exclusions appealed to Federal district courts; resolved voluntary self-disclosures submitted by providers and grant and contract recipients; and participated in the negotiations and settlements of FCA matters by the Department of Justice involving the AKS, Stark Law, CMS reimbursement issues, and DEA and FDA compliance issues. In connection with certain FCA resolutions, Matt also negotiated and monitored corporate integrity agreements.

On the Florida junior circuit and in college, Matt was a competitive tennis player. Matt played on the varsity team and was captain his senior year at Rhodes College, earning ITA Division III and SCAC All-Academic Honor Roll awards his sophomore, junior, and senior years. Matt is an active member of the American Health Law Association (AHLA) and currently serves as a Vice Chair of AHLA’s Fraud and Abuse Practice Group.

Photo of Vinay Kohli Vinay Kohli

Vinay Kohli is a partner in the Health Care Group and Litigation Department.  Vinay is a seasoned trial lawyer with more than a decade of experience representing clients in the health care provider industry—including hospital systems, physicians, and post-acute care facilities as well…

Vinay Kohli is a partner in the Health Care Group and Litigation Department.  Vinay is a seasoned trial lawyer with more than a decade of experience representing clients in the health care provider industry—including hospital systems, physicians, and post-acute care facilities as well as healthcare technology and revenue cycle management companies.

Recognized for his focus and commitment to the healthcare industry, a wide range of health care businesses use Vinay as an outside general counsel to guide them on strategic planning issues, compliance matters, operational questions, and reimbursement issues.  He provides regulatory, compliance, reimbursement advice on topics that range from venture formation and risk management to an array of contract negotiations.

He is also experienced in defending health care fraud and abuse litigation, prosecuting managed care disputes against payors, and handling government investigations.  He is frequently called upon to serve as lead trial counsel in commercial litigation disputes for health care industry clients that span the gamut from trade secret misappropriation, unfair business practices, and breach of fiduciary claims.

Vinay received his B.B.A., magna cum laude, M.A., and J.D. from the University of Texas at Austin in 2005, 2006, and 2009 respectively.

Prior to joining Proskauer, Vinay was a partner in the Healthcare and Commercial Litigation groups at King & Spalding.