The US Supreme Court ruled Friday that the Department of Justice (DOJ) can retain its power to dismiss third-party federal whistleblower actions filed on behalf of the government under the False Claims Act (FCA). The FCA allows whistleblowers to sue on behalf of the government to recover taxpayer funds paid under false pretenses, with the whistleblowers able to receive a portion of the damages.
Justice Elena Kagan, writing for the majority, pointed out the unique nature of the statute, saying:
The statute is unusual in authorizing private parties—known as relators—to sue on the Government’s behalf. When a relator files a complaint, the Government gets an initial opportunity to intervene in the case. If the Government does so, it takes the lead role. If not, that responsibility falls to the relator, the only person then pressing the suit. But even when that is so, the Government retains certain rights, including the right to intervene later upon a showing of good cause.
Justice Kagan asserts that, despite the unique relationship between the relator and the government, “the suit alleges injury to the Government alone. And the Government, once it has intervened, assumes primary responsibility for the action.”
Therefore, Justice Kagan clarifies, the government can seek dismissal of an FCA claim as long it has intervened during the litigation. The opinion goes on to direct district courts to handle such dismissals under Federal Rule of Civil Procedure 41(a), which governs voluntary dismissals of federal lawsuits.
Justice Clarence Thomas filed a dissent, emphasizing the importance of the timing of the government’s intervention, saying:
This case requires us to decide whether the Government enjoys the same panoply of procedural rights when it takes over an action during the seal period and when (as here) it intervenes in the action “at a later date” after the relator has “proceed[ed] with the action.” quoting §3730(c)(3).
Justice Thomas suggests that the language of the FCA does not make clear that the government has broad dismissal power. Justice Thomas also claims that the FCA may conflict with Article II of the constitution, as the President is the sole holder of the power to assign executive authority to “Officers of the United States,” and therefore Congress cannot authorize the relator to act on the government’s behalf.
Justices Brett Kavanaugh and Amy Coney Barrett concurred with the majority, while also acknowledging the relevancy of Justice Thomas’ Article II concerns.
The case was originally filed on behalf of the government by Jesse Polansky, alleging that his former employer, Executive Health Resources, Inc (a subsidiary of UnitedHealth Group Inc), defrauded Medicare by incorrectly certifying hospital admissions. The government attempted to dismiss the claim, with Polansky claiming in district court that he should be able to decide if the case should be dismissed. The court found for the government, therefore, Polansky filed for a writ of certiorari to the Supreme Court.
This is not the first high-profile application of the FCA. Floyd Landis, a member of the US Postal Service (USPS) Tour de France bicycling team, famously used the FCA to sue his teammate Lance Armstrong. Landis alleged that Armstrong violated his USPS contracts by using performance-enhancing drugs, thereby defrauding the US government of tax funds. Armstrong, Landis and the US government settled in 2018, with Armstrong being forced to pay out $5 million. Landis received $1.1 million in the settlement.
