02 February 2022

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.” What is notable about this case, however, is not the government’s dismissal request, which was a standard, Granston-style request. Rather, it is the fact that, in affirming the government’s dismissal request, the First Circuit deepened the circuit split regarding the government’s authority to dismiss FCA cases, joining the D.C. Circuit in holding that the government has broad FCA dismissal authority.

With the First Circuit’s decision, the circuit split over the government’s FCA dismissal authority stands as follows:

  • First and D.C. Circuits: The government has broad, “unfettered” authority to dismiss FCA cases.
  • Third and Seventh Circuits: The government must satisfy the standard for voluntary dismissals contained in Federal Rule of Civil Procedure 41(a). We recently covered this standard here.
  • Ninth Circuit and Tenth Circuits: The government must identify a “valid government purpose” and a “rational relation between dismissal and accomplishment of that purpose.”

The Fifth Circuit, in a recent decision reviewed here, refused to commit to one of these standards but, consistent with the First and D.C. Circuits, confirmed that the government has broad FCA dismissal authority.

The First Circuit found its approach supported by the text of the FCA, noting it “would be odd to have courts micromanage government investigations when the [FCA] also provides that the government has discretion whether to pursue any false claims that it identifies through those investigations.” In rejecting the approaches taken by the other circuits, the First Circuit noted that (1) Rule 41 is “inapt” to the “unique context of a qui tam action” and (2) it “see[s] no basis in the statutory language for requiring the government to make a prima facie showing that its motion is rational, reasonable, or otherwise proper.”

Importantly, though finding that the government has broad dismissal authority, the First Circuit cautioned that that authority is not entirely unlimited. The First Circuit noted, for example, that if a relator can show that the government’s request for dismissal is unconstitutional or constitutes fraud on the court, the government’s request for dismissal should be denied. In this way, the First Circuit differs from the D.C. Circuit, which has acknowledged, but not expressly adopted, a “fraud on the court” exception.

The First Circuit’s decision can be found here.

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