Supreme Court Mulls Scope of DOJ Dismissal Authority
On December 6, 2022, the Supreme Court heard oral argument in United States ex rel. Polansky v. Executive Health Resources, which presents the question of whether the government has the authority to dismiss a qui tam suit after initially declining to intervene, and if so, what standard of review applies to the government’s motion to dismiss. Overall, the lines of questioning suggest that the Court will conclude that the government may dismiss qui tam suits after initially declining to intervene. However, there was no clear consensus around how to define a judicially enforceable standard for evaluating the government’s dismissal authority.
In Fraudulent Inducement Qui Tam, DOJ Once Again Invokes Dismissal Authority
As discussed here and here, DOJ during the last administration reinvigorated the use of its statutory authority to move to dismiss qui tam cases over a relator’s objections. But over the past two years, DOJ’s use of this authority has once again fallen off. However, last week, DOJ moved to dismiss a qui tam suit in the District of Maryland alleging that the defendants knowingly presented flawed studies to the Department of Health and Human Services (HHS) to induce HHS to purchase defendants’ influenza treatment for the Strategic National Stockpile (SNS). DOJ’s motion to dismiss serves as an important reminder of the potential benefits of strategically engaging with DOJ and HHS early in the life of a qui tam case about whether dismissal is warranted.
CBO Reports on Grassley Bill That Would Modify Escobar Materiality and Impose Rational Relation Test on Granston Dismissals
On July 15, 2022, the Congressional Budget Office (CBO) issued a cost estimate concerning the False Claims Amendments Act of 2021, a bill sponsored by Senator Grassley. The bill would alter the False Claims Act in three important ways. (more…)
Supreme Court Grants Certiorari to Resolve Circuit Split on the Government’s Authority to Dismiss FCA Cases Over Relators’ Objections
On June 21, 2022, the Supreme Court granted certiorari to resolve a Circuit split on the standard for evaluating the government’s authority to dismiss a qui tam over the relator’s objection. As we have previously written (see here and here), various Circuits have adopted different standards. The Supreme Court has agreed to review a decision of the Third Circuit affirming a district court’s grant of the United States’ motion to dismiss a qui tam. (more…)
First Circuit Joins Circuit Split on FCA Dismissal Authority, Finds Government Has Broad Authority to Dismiss FCA Cases
On January 21, 2022, the First Circuit affirmed the government’s request for dismissal of a whistleblower complaint alleging that several pharmaceutical companies had colluded to defraud Medicare Part D. The government, after declining to intervene, requested dismissal based on its finding that: (1) the suit would require “substantial expenditure of government resources”; (2) “many key aspects of [the relator’s] allegations [we]re not supported”; and (3) “allegations that [the relator] used the qui tam process to leverage his financial interests through securities trading . . . convince[d] the [g]overnment that [the relator was] not an appropriate advocate of the United States’ interests.” (more…)
Third Circuit Adopts the Seventh Circuit’s Voluntary Dismissal Standard for Evaluating Granston Motions to Dismiss
On October 28, 2021, the Third Circuit affirmed a district court’s grant of the United States’ motion to dismiss—over the relator’s objection—a qui tam alleging that the defendant had caused hospitals to submit false claims. Adopting the Seventh Circuit’s approach, the court determined that in evaluating the government’s motion to dismiss over a relator’s objection in a declined qui tam, courts should apply the standards for voluntary dismissals contained in Federal Rule of Civil Procedure 41(a).
Proposed FCA Amendments Blocked from Senate Infrastructure Bill
The recently proposed amendments to the False Claims Act have stalled out for now. As discussed here and here, these bipartisan proposed amendments—led by Senator Grassley—would have made four changes to the FCA, and most notably, would have radically altered the burden of proof for establishing materiality.
But after making a sudden appearance on Friday in the Senate infrastructure bill, last night those amendments were excluded. This means that the amendments’ proponents will need to consider other vehicles, particularly “must pass” bills such as the budget resolution. The Senate is expected to consider amendments to the budget resolution later this week.
We will continue to monitor developments regarding this proposed legislation.
FCA Amendments Resurface in Senate Infrastructure Bill
As discussed further here, a bipartisan group of senators, led by Senators Grassley (R-IA), Leahy (D-VT), Wicker (R-MI), Durbin (D-IL), and Kennedy (R-LA), recently introduced proposed amendments to the False Claims Act. Those amendments have now been incorporated into the infrastructure bill currently being debated in the Senate. (more…)
Bipartisan Legislation Introduced To Overhaul FCA To Further Hamstring Defendants
A bipartisan group of senators, led by Senators Grassley (R-IA), Leahy (D-VT), Wicker (R-MI), Durbin (D-IL), and Kennedy (R-LA), has introduced the False Claims Amendments Act of 2021. This legislation is worth watching not just because it would significantly amend the FCA, but because Senator Grassley has a successful track record of shepherding through to passage legislation reversing gains made by defendants in FCA cases.
Fifth Circuit Affirms DOJ’s Broad Authority to Dismiss Qui Tams Over Relators’ Objections, but Adds Teeth to “Hearing” Requirement
On July 7, 2021, the Fifth Circuit affirmed a district court’s grant of the United States’ motion to dismiss—over the relator’s objection—two qui tams that challenged pharmaceutical patient support programs. While the court’s decision is consistent with those of other courts of appeal that have confirmed DOJ’s broad authority to dismiss qui tams over relators’ objections, the Fifth Circuit appears to add some teeth to the requirement that the relator be provided with a “hearing” before such a dismissal may be granted.