24 F.4th 32
1st Cir.2022Background:
- First Circuit case of first impression construing 31 U.S.C. § 3730(c)(2)(A) (government motion to dismiss a relator's qui tam suit over relator's objection).
- Relator John Borzilleri alleged pharmaceutical manufacturers and PBMs colluded to inflate Medicare Part D prices for MS drugs and filed a sealed qui tam complaint in 2014.
- After a multi‑year investigation, the government declined to intervene and later moved to dismiss under § 3730(c)(2)(A), citing resource burdens, perceived weaknesses in key allegations, and concerns about the relator's motives/conduct.
- District court held a § 3730(c)(2)(A) hearing, denied relator discovery and an evidentiary hearing, and granted the government’s motion; relator appealed.
- The appeal presented (a) what the statutory hearing requires (nature of court review and government burden), and (b) whether dismissal here was improper given the government’s investigatory choices.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nature of § 3730(c)(2)(A) hearing and government's burden | § 3730(c)(2)(A) requires meaningful judicial scrutiny; adopt Ninth Circuit (Sequoia) — government must justify dismissal | Government has broad discretion; hearing is opportunity for relator to persuade government (Swift); no heavy justificatory burden on government | Government must state its reasons but is not required to carry an initial burden to justify dismissal; court need not perform Sequoia‑style inquiry |
| Standard for denying a government motion to dismiss | Court should review whether government diligently investigated and independently assess merits before permitting dismissal | Court should defer to executive dismissal decisions absent extreme misconduct | Court should deny dismissal only if relator shows government action transgresses constitutional limits or perpetrates fraud on the court; diligence is not its own basis for denial |
| Entitlement to discovery/evidentiary hearing to probe government conduct | Relator entitled to discovery/evidentiary hearing to show investigatory inadequacy or misconduct | Discovery only warranted upon a strong showing of impropriety; otherwise premature and harmful to investigations | Discovery/evidentiary hearing permitted only if relator makes a substantial threshold showing of impropriety comparable to fraud on the court or constitutional violation |
| Application to Borzilleri's case (sufficiency of investigation; dismissal) | Government failed to investigate key allegations; dismissal was arbitrary/fraudulent | Government conducted multi‑year investigation (documents, witness interviews, experts); dismissal appropriate | Affirmed dismissal; relator failed to show constitutional transgression or fraud on the court and did not meet threshold for discovery |
Key Cases Cited
- Sequoia Orange Co. v. Baird‑Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998) (adopts rule requiring government to identify a valid purpose and rational relation for dismissal)
- Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) (treats hearing as opportunity for relator to persuade government; government has broad dismissal discretion)
- United States ex rel. CIMZNHCA, LLC v. UCB, Inc., 970 F.3d 835 (7th Cir. 2020) (discusses limits on review and application of Rule 41 in qui tam context)
- Heckler v. Chaney, 470 U.S. 821 (1985) (agency decisions not to prosecute generally committed to agency discretion)
- Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (relator has an interest in the suit and is entitled to a hearing before dismissal)
- Aoude v. Mobil Oil Corp., 892 F.2d 1115 (1st Cir. 1989) (court's inherent power to deny relief where a party perpetrates fraud on the court)
- United States v. Armstrong, 517 U.S. 456 (1996) (executive action subject to constitutional constraints, including equal protection)
- Cnty. of Sacramento v. Lewis, 523 U.S. 833 (1998) (discusses "arbitrary in the constitutional sense" and conscience‑shocking government conduct)