The Federal False Claims Act is in the News, Part II

We’ve mentioned the Federal False Claims Act, 31 U.S.C. §§ 3729 – 3733 (“FCA”) several times over the past few weeks. In June, the United States Supreme Court issued opinions in two cases construing the FCA. Unusual for this Court, which typically splits upon predictable political lines, one of these opinions was unanimous, while the other was an 8 – 1 decision. One opinion is generally unfavorable to FCA defendants, while the other is generally favorable. We’ve already discussed the unfavorable one, United States ex rel. Schutt v. SuperValu, 143 S. Ct. 1391 (2023). In this blog, we’ll discuss the favorable one.

In United States ex rel. Polansky v. Executive Health Resources, Inc., 143 S. Ct. 1720 (2023) the Court considered when, and how, the Federal Government may dismiss a qui tam action in which it had previously declined to intervene. Under the FCA, a qui tam action is initially filed under seal. Before the seal period expires, the Government may intervene and prosecute the case itself. In Polansky, the Government declined to intervene during the seal period, but continued to monitor the case as it progressed.

The relator, a physician who had worked for the defendant, alleged it was defrauding the Government by helping its clients charge for procedures at inpatient rates when they should have been charged as outpatients. The case went on for years. The Government eventually determined the costs and efforts involved in monitoring the case outweighed any benefits it might gain from a favorable outcome and moved to dismiss. The trial court granted the motion, and the United States Court of Appeals for the Third Circuit affirmed.

The Supreme Court affirmed, holding the Government properly applied the relevant factors in deciding to intervene to dismiss the case, even though it had previously declined to intervene. Justice Thomas, who had written the Court’s unanimous opinion in SuperValu, was the sole dissenter.

If you would like a consultation on the FCA, or any legal matter, do not hesitate to contact Scaringi Law at 717-657-7770.