Over the last year, a few important questions related to False Claims Act (FCA) cases have garnered significant attention. Two of those questions ultimately made their way to the Supreme Court. In one case, which has already been argued, the Court addresses whether the government has authority to dismiss an FCA case brought by a private citizen on the government's behalf (a qui tam action) after originally declining to intervene and, if so, the applicable standard of judicial review. More recently, the Court has agreed to hear two cases that address whether a defendant's "objectively reasonable" interpretation of ambiguous statutory language presents a cognizable defense to "knowledge" under the FCA. We cover both of these issues in more detail below.
Supreme Court Hears Argument on the Government's Dismissal Authority Under Section 3730(c)(2)(A)
The FCA empowers the government to "dismiss [a qui tam] action notwithstanding the objections of the person initiating the action if the person has been notified by the government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion." In early December, the Supreme Court heard oral argument in U.S. ex rel. Jesse Polansky v. Executive Health Resources, Inc., which presents the question of "whether the government has authority to dismiss an FCA suit [under section 3730(c)(2)(A)] after initially declining to proceed with the action, and what standard applies if the government has that authority."
The high court previously declined to address the scope of the government's dismissal authority under this provision on at least two recent occasions when it denied petitions for writs of certiorari in U.S. rel. Schneider v. JPMorgan Chase Bank NA in April 2020 and in CIMZNHCA LLC v. United States in June 2021, but courts of appeal continued to grapple with this question. For example, in January 2022, the First Circuit answered a similar question in Borzilleri v. Bayer AG, 24 F. 4th 32 (1st Cir. 2022) and adopted a deferential standard of review with respect to government decisions to dismiss (we covered this case in depth here). Then, in June 2022, the high court finally agreed to hear this question after the Third Circuit affirmed the lower court's dismissal of the relator's suit in Polansky.
Dr. Jesse Polansky filed suit in July 2012 against Executive Health Resources, Inc., accusing the health care billing certification company of helping hospitals overbill federal health care programs by certifying inpatient services that should have been performed on an outpatient basis. The government initially declined to intervene in June 2014, but then in 2019, sought dismissal under Section 3730(c)(2)(A), citing as grounds for its motion litigation expense and the low likelihood of success. The district court granted dismissal in November 2019 and, in October 2021, the Third Circuit affirmed. The Third Circuit rejected Dr. Polansky's...
