The Supreme Court ruled 8–1 that the U.S. Department of Justice is allowed to seek dismissal of a whistleblower lawsuit despite the objections of a whistleblower who has a financial interest in the outcome of the lawsuit.
The case dates to 2012, when physician Jesse Polansky brought a lawsuit on behalf of the U.S. government regarding Executive Health Resources Inc., a subsidiary of UnitedHealth Group Inc. that assists hospitals and physicians in submitting bills to the government for covered services as part of federal health care programs such as Medicare. Polansky worked as a consultant for Executive Health, the respondent in the case.
The lawsuit was brought under the federal False Claims Act (FCA), which is a key tool the government uses to crack down on health care fraud.
Sometimes called the Lincoln Law, the FCA was enacted in 1863 to deal with defense contractor fraud during the Civil War.
The act currently provides that anyone who knowingly files false claims with the government is liable for triple damages plus a $2,000 penalty for each false claim.
The FCA allows the government to pursue perpetrators on its own and for private citizens—called relators in legal parlance—to sue those who defraud the government on behalf of the government in what are known as qui tam suits. Private citizens who prevail may be awarded part of what the government recovers.
“During his work for respondent, petitioner [i.e., Polansky] discovered that respondent was ‘systematically enabling its client hospitals’ to misclassify patients—certifying treatment as ‘inpatient services’ that should have been certified as ‘outpatient services,’” according to papers filed with the Supreme Court.
“This scheme ‘exploited the difference in reimbursement rates for inpatient and outpatient services, causing hundreds of thousands of claims’ for services improperly billed at higher rates.”
Polansky said that “Medicare generally pays about $4,500–$5,000 more for inpatient services ... than it does when the same services are provided to a patient classified as outpatient observation.”
“Given the size of respondent’s operation, petitioner’s experts provided uncontroverted evidence of a potential billion-dollar recovery.”
The government spent years investigating the claim but decided not to intervene. Polansky’s lawsuit kept going for years.
In February 2019, the government notified the parties that it intended to dismiss the entire lawsuit under the provisions of the FCA.
But “after extensive negotiations with the parties, the government ultimately elected not to seek dismissal, and permitted the case to continue” on the understanding that Polansky would substantially narrow the scope of his claims.
Polansky did narrow his claims but didn’t go far enough, in the government’s view.
The government cited in its subsequent dismissal motion the “tremendous, ongoing burden on the government,” the time needed for federal attorneys to prepare and for other personnel to collect and produce documents, the need to protect privileged information, and the government’s doubts about Polansky’s credibility and his ability to prove a violation of the FCA.
In light of those factors, the government concluded that “the potential benefits of permitting [Polansky’s] case to proceed are outweighed by both the actual and potential costs to the United States.”
The U.S. District Court in the Eastern District of Pennsylvania granted the government’s motion to dismiss. The U.S. Court of Appeals for the 3rd Circuit upheld the dismissal of the lawsuit in October 2021.
Kagan wrote for the Supreme Court that the “questions presented here concern the Government’s ability to dismiss an FCA suit over a relator’s objection.”
“Everyone agrees that if the Government intervenes at the suit’s start, it can later move to dismiss. But the parties dispute whether, or in what circumstances, the same is true if the Government declines its initial chance to intervene.”
The FCA gives the government discretion to reevaluate whistleblower claims and decide not to move forward, the justice wrote, adding that nothing in the statute “suggests that the Government should have to take a back seat to its co-party relator,” the justice wrote.
“Today, we hold that the 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 outset or afterward,” Kagan wrote.
The Supreme Court affirmed the decision of the 3rd Circuit.
In his dissent, Justice Thomas wrote that the False Claims Act does not give the government “power to unilaterally dismiss a pending qui tam action after it has ‘decline[d] to take over the action’ from the relator at its outset.”
The statute’s whistleblower provisions “have long inhabited something of a constitutional twilight zone,” he wrote.
“There are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.”
The second article of the U.S. Constitution deals with the powers of the executive branch.
Justice Brett Kavanaugh filed an opinion concurring with the court’s judgment but sharing Thomas’s concerns about the act’s whistleblower provisions, which he said he hoped the court would consider in an appropriate case in the future. Justice Amy Coney Barrett joined Kavanaugh’s opinion.
Polansky’s attorney, Daniel Geyser of Haynes and Boone in Dallas, and Executive Health’s attorney, Mark Mosier of Covington and Burling in Washington, didn’t respond by press time to a request by The Epoch Times for comment.
U.S. Department of Justice officials also didn’t respond by press time to a request for comment.
Attorney Debra Schreck of Arnold and Porter Kaye Scholer in New York told Bloomberg Law that the new decision “reinforces that it is critical for the government—the real party in interest in these cases—to retain the ability to rein in, for example, meritless qui tams, regardless of the stage of the case.”
A whistleblower “can mount an argument against dismissal, but ultimately the government must be permitted to determine whether, as the Court noted, the suit would vindicate the Government’s interests.”
