United States ex rel. Polansky v. Executive Health Resources

by Supreme Court of the United States

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

UNITED STATES EX REL. POLANSKY v. EXECUTIVE HEALTH RESOURCES, INC., ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 21–1052. Argued December 6, 2022—Decided June 16, 2023

The False Claims Act (FCA) imposes civil liability on any person who presents false or fraudulent claims for payment to the Federal Government. See 31 U. S. C. §§3729–3733. The statute is unusual in authorizing private parties (known as relators) to sue on the Government’s behalf. Those suits—qui tam actions—are “brought in the name of the Government.” §3730(b)(1). And the injury they assert is to the Government alone. But in one sense, a qui tam suit is “for” the relator as well as the Government: If the action leads to a recovery, the relator may receive up to 30% of the total. §§3730(b)(1), (d)(1)–(2).

Because a relator is no ordinary plaintiff, he is subject to special restrictions. He must file his complaint under seal and serve a copy and supporting evidence on the Government. See §3730(b)(2). The Government then has 60 days (often extended for “good cause”) to decide whether to “intervene and proceed with the action.” §§3730(b)(2)–(3). If the Government elects to intervene during that so-called seal period, the action “shall be conducted by the Government”; otherwise, the relator gets “the right to conduct the action.” §§3730(b)(4)(A)–(B). But even if the Government passes on intervention, it remains a “real party in interest,” United States ex rel. Eisenstein v. City of New York, 556 U. S. 928, 930, and it retains continuing rights. Most relevant here, the Government can intervene after the seal period ends, so long as it shows good cause to do so. See §3730(c)(3).

In this case, the relator—petitioner Jesse Polansky—filed a qui tam action alleging that respondent Executive Health Resources helped hospitals overbill Medicare. The Government declined to intervene during the seal period, and the case spent years in discovery. Eventually, the Government decided that the varied burdens of the suit outweighed its potential value, so it filed a motion under §3730(c)(2)(A) (Subparagraph (2)(A) for short), which provides that “[t]he Government may dismiss the action notwithstanding the objections of the [relator],” so long as the relator received notice and an opportunity for a hearing. The District Court granted the request, finding that the Government had thoroughly investigated the costs and benefits and come to a valid conclusion.

The Court of Appeals for the Third Circuit affirmed after considering two legal questions. First, does the Government have authority to dismiss an action under Subparagraph (2)(A) if it declined to intervene during the seal period? The Court of Appeals held that the Government has that power so long as it intervened sometime later. And the court found that the Government had satisfied that condition here. Second, what standard should a district court use in ruling on a Subparagraph (2)(A) motion? The Court of Appeals held that the proper standard comes from Federal Rule of Civil Procedure 41(a)—the rule governing voluntary dismissals in ordinary civil litigation. And here, the Third Circuit ruled, the District Court had not abused its discretion in granting the Government’s motion.

Held:

1. The Government may move to dismiss an FCA action under §3730(c)(2)(A) whenever it has intervened—whether during the seal period or later on. Pp. 7–13.

(a) The Government contends that it may move to dismiss under Subparagraph (2)(A) even if it has never intervened. But Paragraph 2 (in which Subparagraph (2)(A) appears) refutes that idea. Unlike other FCA provisions, Paragraph 2 does not say that it applies when the Government is not a party. So the Government can prevail on its argument only by implication. And the implication does not fit. Subparagraphs (2)(A) and (2)(B) grant the Government uncommon power: to dismiss and settle an action over the objection of the person who brought it. That sort of authority would be odd to house in an entity that has continually declined to join a case. And subparagraphs (2)(C) and (2)(D) presuppose that the Government has intervened. Subparagraph (2)(C) enables the court to restrict the relator’s role when needed to prevent interference with the “Government’s prosecution of the case.” And subparagraph (2)(D) allows the court to restrict the relator’s participation if the defendant would otherwise suffer an “undue burden”; here again the premise is that the Government has joined the case, else a court would be limiting the role of the defendant’s sole adversary.

Zoom out to the rest of §3730(c), and the Government’s “intervention is irrelevant” view looks even weaker. Section 3730(c) addresses the “Rights of the Parties” and contains four relevant paragraphs. Paragraph 1 states that it applies only “[i]f the Government proceeds with the action”—something that the parties agree cannot happen unless the Government intervenes. And the paragraph concludes by stating that the relator may continue as a party, “subject to the limitations set forth in paragraph (2).” It thus states that when the Paragraph 1 situation obtains, the relator’s role will be limited in the ways set out in Paragraph 2. And the Paragraph 1 situation obtains only when the Government has intervened. So that is also when Paragraph 2’s provisions (including the one about dismissal) kick in. In other words, the express intervention prerequisite of Paragraph 1 carries forward into Paragraph 2 through the “subject to” clause connecting the two. Only when Paragraphs 3 and 4 are reached does the necessity of intervention drop away, as those paragraphs (unlike Paragraph 2) specify the circumstances in which they apply: Paragraph 3 applies when “the Government elects not to proceed,” and Paragraph 4 applies “[w]hether or not the Government proceeds.” And just to pile on a bit, the Government’s alternative construction creates surplusage twice over, violating the interpretive principle that “every clause and word of a statute” should have meaning. Montclair v. Ramsdell, 107 U. S. 147, 152. So absent intervention, Paragraph 2 does not apply, and the Government cannot file a motion to dismiss. Pp. 8–10.

(b) A straightforward reading of the FCA refutes Polansky’s position that Paragraph 2 (as linked to Paragraph 1) applies only when the Government’s intervention occurs during the seal period. Recall that the Government can intervene either during the seal period or “at a later date upon a showing of good cause.” §3730(c)(3). A successful motion to intervene turns the movant into a party. And once the Government becomes a party, it (alongside the relator) does what parties do: It “proceeds with the action.” That phrase, again, is the trigger for Paragraph 1: When the Government “proceeds with the action,” it assumes “primary responsibility” for the case’s “prosecuti[on].” And for the reasons above, whenever that is true, Paragraph 2 kicks in too. So the right to dismiss under Subparagraph (2)(A) attends a later intervention, just as it does an earlier one.

Polansky’s contrary argument mainly relies on Paragraph 3, which provides that a court approving the Government’s post-seal-period intervention motion may not “limit[] the status and rights” of the relator. That clause, Polansky argues, prevents the court from giving the Government “primary responsibility” over the suit, including the power to dismiss. But on Polansky’s reading, the Paragraph 3 clause would effectively negate Paragraphs 1 and 2. The Government, even though now “proceed[ing]” with the case, would not acquire the control that Paragraphs 1 and 2 afford in that circumstance. Polansky’s construction would thus put the statute “at war with itself.” United States v. American Tobacco Co., 221 U. S. 106, 180. Instead, the clause is best read to tell the court not to impose additional, extra-statutory limitations on the relator when granting the Government’s motion, ensuring that the parties will occupy the same positions as they would have if the Government had intervened in the seal period. And that view fits the FCA’s Government-centered purposes. Congress knew that circumstances could change and new information come to light. So Congress enabled the Government, in the protection of its own interests, to reassess litigation of qui tam actions and join a case without having to take a back seat to its co-party relator. Pp. 10–13.

2. In assessing a motion to dismiss an FCA action over a relator’s objection, district courts should apply the rule generally governing voluntary dismissal of suits in ordinary civil litigation—Rule 41(a). The Federal Rules are the default rules in civil litigation, and nothing warrants a departure from them here. To the contrary, the FCA cross-references the Rules, and this Court has made clear that other Rules also apply in the ordinary course of FCA litigation. The application of Rule 41 in the FCA context will differ in two ways from the norm. First, the FCA requires notice and an opportunity for a hearing before a Subparagraph (2)(A) dismissal can take place. Second, in the FCA context, the set of interests the court should consider in ruling on a post-answer motion is more likely to include the relator’s, as the relator may have committed substantial resources to the action. But even so, the Third Circuit was right to note that the Government’s motion to dismiss will satisfy Rule 41 in all but the most exceptional cases. And here, the Government gave good grounds for thinking that this suit would not do what all qui tam actions are supposed to do: vindicate the Government’s interests. Absent some extraordinary circumstance, that sort of showing is all that is needed for the Government to prevail on a motion to dismiss.

17 F. 4th 376, affirmed.

Kagan, J., delivered the opinion of the Court, in which Roberts, C. J., and Alito, Sotomayor, Gorsuch, Kavanaugh, Barrett, and Jackson, JJ., joined. Kavanaugh, J., filed a concurring opinion, in which Barrett, J., joined. Thomas, J., filed a dissenting opinion.

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