U.S. Supreme Court Permitted Department of Justice to Dismiss Whistleblower Lawsuits

U.S. Supreme Court Permitted Department of Justice to Dismiss Whistleblower Lawsuits

The U.S. Supreme Court with a majority of 8:1 ruled that the Department of Justice may dismiss whistleblower lawsuits filed under the False Claims Act’s qui tam provision even if the government initially declined to intervene in the case. Justice Elena Kagan wrote for the majority in United States ex rel. Polansky vs. Executive Health Resources, Inc., while conservative Justice Clarence Thomas had dissented.

The Court upheld that the Justice Department holds the power to unilaterally dismiss lawsuits filed under the exclusive law that allows the whistleblowers to sue businesses on behalf of the government to recover taxpayer money paid to companies based on false claims in exchange for a portion of any recovery.

The Supreme Court upheld a lower Court’s verdict to permit the Justice Department to dismiss the lawsuit filed against the UnitedHealth Group Inc UNH.N unit by Jesse Polansky, a former employee who alleged it to be a ‘wrongdoing.’

Polansky had sought to bar the department from dismissing whistleblower lawsuits filed under the False Claims Act in instances in which the government initially declined to exercise its right to take over the cases.

The Philadelphia-based 3rd US Circuit Court of Appeals upheld the dismissal of Polansky's 2012 lawsuit that brought charges against the UnitedHealth's Executive Health Resources unit of defrauding Medicare, the government health insurance program for people ages 65 and older, by falsely certifying hospital admissions as medically necessary.

In the verdict Kagan wrote:

“Today, we hold that the government may seek dismissal of an FCA (False Claims Act) action over a relator's objection so long as it intervened sometime in the litigation, whether at the outset or afterward.”

According to Justice Department data, whistleblower cases brought under the False Claims Act resulted in $48.2 billion in recoveries from 1987 to 2021. Most of that came from the 20% of cases that the government exercised its right to join and take over, with cases that whistleblowers litigated alone netting $3.5 billion in the same time period.

In 2019, the Justice Department sought dismissal of Polansky's lawsuit by quoting concerns related to the ‘tremendous burden of requests’ for the government to produce documents. Executive Health Resources denied wrongdoing and argued that the department had the right to dismiss the case over Polansky's objections.

A number of business groups, including the US Chamber of Commerce, have said that the fact that few cases in which the government did not intervene have been successful is an indication why the Justice Department ought to exercise its right to dismiss lawsuits that lack merit. The department began doing more often under a 2018 policy adopted during Republican former President Donald Trump's administration of seeking the dismissal of ‘meritless’ or ‘parasitic’ lawsuits that the government did not back.