On July 31, the Eleventh Circuit issued the first U.S. Court of Appeals decision applying the Supreme Court’s decision in United States ex rel. Polansky v. Executive Health Resources, Inc. The Eleventh Circuit’s decision upheld the Department of Justice’s (DOJ) dismissal of a qui tam whistleblower suit.
The Supreme Court’s Polansky ruling, issued in June, grants the DOJ the authority to dismiss qui tam whistleblower lawsuits in cases in which it initially chose not to intervene.
Under the False Claims Act, a whistleblower may file a qui tam lawsuit against a fraudster on behalf of the U.S. government. The DOJ then has the opportunity to intervene in the case and either litigate it itself or dismiss the suit. If the DOJ elects not to intervene, then the whistleblower can proceed with the qui tam suit on their own. According to the Supreme Court, the DOJ has the authority to dismiss a qui tam case it chose not to intervene in, even several years after that decision.
The Eleventh Circuit case concerned a qui tam suit originally filed in August 2013 by a whistleblower alleging that her former employer filed fraudulent claims paid by government healthcare programs. Initially, the government chose not to intervene but in June 2022, nearly nine years after the initial qui tam suit was filed, it chose to intervene and dismiss the suit.
The Eleventh Circuit upheld a District Court ruling okaying the DOJ’s dismissal. The decision, which cites extensively to Polanksy, states that” the district court did not abuse its discretion by granting the government’s motion to dismiss under § 3730(c)(2)(A). As in Polansky, the government in this case “gave good grounds for thinking that this suit would not do what all qui tam actions are supposed to do: vindicate the [g]overnment’s interests.”
In recent years, the overall amount of recoveries collected by qui tam whistleblower suits have been in sharp decline, a fact many whistleblower advocates attribute to the DOJ’s tendency to unfairly dismiss strong whistleblower cases. In Fiscal Year 2022, the whistleblower recoveries in government declined cases exceeded the recoveries obtained by the government in intervened cases for the first time in the history of the False Claims Act.
“The Supreme Court’s decision will require Congress to fix the False Claims Act to protect whistleblower rights to pursue qui tam lawsuits when the government declines to intervene,” said whistleblower attorney David Colapinto, a founding partner of Kohn, Kohn & Colapinto. “Congress should create common sense standards for the government to meet when it wants to intervene late just to dismiss a whistleblower’s case. Under the Supreme Court’s ruling the government can intervene to dismiss the case years after the whistleblower has litigated the claims on behalf of the government.”
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. While the bill does not address the DOJ’s dismissal authority, whistleblower advocates claim the law will improve the efficacy of the FCA in holding fraudsters accountable.
Further Reading:
SCOTUS Rules to Not Curb DOJ’s Dismissals of Qui Tam Whistleblower Suits
Bipartisan Legislation Unveiled to Strengthen False Claims Act