The U.S. Supreme Court Affirms the Government's Authority to Dismiss FCA Qui Tam Cases After Declining to Intervene
The False Claims Act's ("FCA") use of qui tam relators (private individuals bringing suit on behalf of the government) has long raised both procedural and substantive challenges.
On June 16, 2023, the U.S. Supreme Court addressed when, and how, the government can dismiss an FCA case after it initially declined to intervene. In U.S. ex rel. Polansky v. Executive Health Resources Inc. et al., the Court held that the federal government "may seek dismissal of an FCA action over a relator's objection so long as it intervened sometime in the litigation, whether at the onset or afterward."
The Court also addressed the standard courts must apply in evaluating government requests to dismiss FCA suits. The government argued that it had unfettered discretion to direct an FCA suit's dismissal, while the relator had argued for a "complicated form of arbitrary-and-capricious review." The Supreme Court instead endorsed what it termed a "goldilocks position"—adopting the lower court's use of the standard applied under Federal Rule of Civil Procedure 41(a) (which neither party defended). That standard allows dismissal "upon terms the court deems proper"—which, as the Supreme Court noted, the government should satisfy "in all but the most exceptional cases." The Court held that where the government "enumerated the significant costs of future discovery in the suit," while also explaining "in detail why it had come to believe that the suit had little chance of success on the merits," allowing dismissal was "not a close call."
Notably, in concurrence and dissent, Justice Thomas and Justice Kavanaugh (joined by Justice Barrett) flagged what they deemed "substantial arguments that the qui tam device is inconsistent with Article II [under the U.S. Constitution] and that private relators may not represent the interests of the United States in litigation." Although courts have largely not been receptive to constitutional challenges to the FCA's qui tam provisions, these separate opinions could spark new focus on the issue.
Looking forward, defendants should continue to advocate for affirmative dismissal by the government in non-intervened cases. The government as the real party in interest retains significant discretion to dismiss cases even when the Relator objects. Further, the three Justices' flagging of significant constitutional concerns invites likely additional future challenges to the constitutionality of the qui tam provision—which defendants in non-intervened FCA cases should consider asserting.