DOJ Has Broad Dismissal Authority in False Claims Act Cases

On June 16, 2023, the Supreme Court, in United States ex rel. Polansky v. Executive Health Resources, affirmed the federal government’s power to dismiss a False Claims Act action brought under the qui tam provisions whenever it chooses to intervene. The Polansky case had gone on for years and required substantial discovery of documents and testimony from the federal government. The federal government effectively made a cost-benefit determination and decided to dismiss the case, over the objection of Polansky. The district court granted the motion, determining that the DOJ had reached a “valid conclusion based on the results of its investigation” to dismiss the case. The 3rd Circuit Court of Appeals affirmed the granting of the motion, holding that: (1) a motion to dismiss implicitly is a motion to intervene; and (2) the standard to rule on a Subparagraph (2)(A) motion to dismiss comes from the Federal Rule of Civil Procedure. After the court granted review, DOJ argued that it possessed “essentially unfettered discretion to dismiss.” The Supreme Court sided with the government.

The result is, of course, frightening in some ways to qui tam filers, aka relators. Most of these qui tam cases require expert witnesses in order to provide evidence as to the amount of the false claims. If the relator engages the expert, it is the relator who is obligated to pay the expert’s fee—that is, if the engagement letter is properly written. In other words, if you work for a relator as an expert and the government has not intervened, the expert needs to be certain that the relator has the means to pay the expert and that the engagement letter makes it clear that the relator is responsible for the expert’s fee regardless of not only the outcome of the case, but also whether the government intervenes and dismisses the case, as it is now clearly empowered to do under the Polansky case.

The expert should also be certain that his or her fees are paid at least in part by use of a substantial nonrefundable retainer and that current fees (not including the retainer) are paid in a timely manner or work is stopped immediately. I have been involved as an expert in several qui tam cases, but the ones I was involved in had government intervention, so they paid my fees. These cases can be very expensive for the expert, so it is important to have a secure fee arrangement. Additionally, if you are not paid by the time you have to testify, that can be used to impeach you since you would have a “financial interest” in the outcome.

Portions of this blog are also included in an article in the National Law Review. “Recent Supreme Court Case Affirms Government’s Power to Dismiss Qui Tam Suits,” July 31, 2023, Volume XIII, Number 212. Opinions and comments are those of the author.