The False Claims Act (FCA), 31 U.S.C. §§3729–3733, is a significant U.S. reimbursement statute that imposes civil penalties against entities or individuals that engage in fraudulent and abusive goods, services, or contracts against the federal government. Since 1863, billions of taxpayer dollars have been recovered against alleged fraudulent actors under the Act’s qui tam provision. 31 U.S.C. § 3730(b)(1). Qui tam actions are initiated by members of the public – whistleblowers – called ‘relators’ who claim to have specific insider information and evidence of fraud perpetrated against the government. Relators may be entitled to at least 15% of the proceeds of a qui tam settlement or court award. 31 U.S.C. §3730(d)(1)-(2). In 2022, qui tam lawsuits recovered approx. $1.5 billion for the government, and the number of qui tams increased by nearly 10%.
Under the Act, the government may intervene and serve as principal prosecutor in qui tam actions, or, the government may decline to intervene. If the government decides not to proceed with the qui tam and does not move to dismiss it, the complaint is unsealed and the person who initiated the action is entitled to proceed individually and on behalf of the U.S. government. 31 U.S.C. §3730(c)(3), §3730(b)(1). Congress increases relators’ disbursements to 25-30% of the proceeds or settlement amount in qui tam lawsuits that have no government intervention. 31 U.S.C. §3730(d)(1)-(2). In these circumstances, the relators function as quasi-Executive Branch counsel - similar to private attorneys general - to litigate FCA lawsuits. Government-declined qui tams yielded higher financial remunerations for the U.S. than those where the Department of Justice (DOJ) intervened and retained primary responsibility for the FCA lawsuit.
Regardless of whether or not the DOJ had previously intervened, the FCA permits the DOJ to move to dismiss a qui tam action at any time. Congress permits dismissals "notwithstanding the objections of the person initiating the action” provided that the relator is given notice and an opportunity to be heard. 31 U.S.C. §3730(c)(2)(A). A DOJ dismissal could be interpreted by the Judicial Branch as “an important tool to advance the Government’s interests, preserve limited resources, and avoid adverse precedent." (DOJ, Factors for Evaluating Dismissal Pursuant to 31 U.S.C. 3730(c)(2)(A), Jan. 10, 2018 (“Granston Memo”)). The Grantson Memo recommends that the DOJ specify its reasons to dismiss a qui tam action.
Before a motion to dismiss is heard, however, a DOJ-declined qui tam case may have incurred years of litigation, strategic decision making, potential relator property interests, and costs. The legal standard that governs a court hearing on the dismissal of a qui tam lawsuit after DOJ-declined intervention will be determined, in part, by United States ex rel. Polansky v. Executive Health Resources, Inc., No. 21-1052, which is pending a decision by the U.S. Supreme Court. In Polansky, the DOJ's motion to dismiss occurred two years after the DOJ had investigated the qui tam action and decided not to intervene -- and many years after FCA litigation, initiated by the relator, had been ongoing. This SCOTUS decision will examine relevant constitutional issues, such as the amount of authority that the DOJ retains after nonintervention, whether the DOJ must satisfy a rational basis test, show "good cause”, or meet an intermediate-like standard at the mandatory dismissal hearing.
Lorianne Maria Sainsbury-Wong, Esq., HCISPP, CHCP, CPCO [Pronouns: she, her, hers]
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