A U.S. Supreme Court ruling in a False Claims Act (FCA) whistleblower case grants the U.S. Department of Justice (DOJ) the authority to dismiss qui tam whistleblower lawsuits in cases in which it chose not to intervene. According to whistleblower advocates, the ruling weakens the efficacy of the FCA while language within Justice Clarence Thomas’s dissent poses even more serious danger to the constitutionality of certain FCA whistleblower cases.
Under the FCA, 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.
On June 16, the Supreme Court issued an 8-1 ruling in United States, ex rel. Polansky v. Executive Health Resources, Inc. In 2012, Jesse Polansky alleged that Executive Health Resources was falsely certifying inpatient hospital admissions as medically necessary, leading to the overbilling of Medicare. The DOJ chose not intervene in the case and Polansky pursued the qui tam suit without government intervention. In 2019, however, the DOJ moved to dismiss the case. Polanksy appealed this dismissal.
The Supreme Court ruled that the DOJ has the authority to intervene and dismiss a whistleblower’s qui tam suit at any time, even if it chose not to intervene years earlier.
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.
While the Supreme Court’s ruling will not curb the DOJ’s ability to dismiss qui tam whistleblower suits, some whistleblower advocates are even more alarmed by the dissent authored by Thomas.
“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.”
“Even more alarmingly, today’s ruling creates a greater danger to the constitutionality of the False Claims Act,” continued Colapinto, who has represented whistleblowers under the False Claims Act for over 30 years. “Three justices of the Supreme Court have indicated a willingness to consider declaring unconstitutional the False Claims Act provisions that allow whistleblowers to litigate fraud claims on behalf of the government after the government has turned down the case. Justice Clarence Thomas’s dissent was joined by Justices Brett Kavanaugh and Amy Coney Barrett in questioning whether the whistleblower provisions of the False Claims Act violate Article II of the U.S. Constitution.”
“The position of Justice Thomas’s dissent is both dangerous and reckless,” Colapinto added. “This is a green light to every government contractor accused of fraud to argue that a whistleblower’s False Claims Act lawsuit in a declined case is unconstitutional despite the statute that says that whistleblowers can pursue these claims even if the government declines to intervene.”
“Declaring whistleblower rights under the False Claims Act unconstitutional would do great damage to a law that has been on the books for 37 years and that has helped the United States recover over $70 billion from government contractors that have defrauded taxpayers during that time,” concluded Colapinto.
The Polansky ruling comes on the heels of another FCA Supreme Court decision. On June 1, the U.S. Supreme Court issued an unanimous decision in U.S. ex rel. Schutte v. SuperValu Inc. The decision, heralded as a major victory by whistleblower advocates, overturns U.S. Court of Appeals rulings which allowed fraudulent companies to escape liability under the False Claims Act if they could prove their fraudulent actions could be based on a “reasonable interpretation of the law” regardless of whether or not the company intended to commit fraud.
