17 F.4th 376
3d Cir.2021Background:
- The False Claims Act (FCA) enables private relators to sue for fraud on behalf of the United States (qui tam) and proceed in the Government’s name if DOJ declines to intervene.
- Relator Dr. Jesse Polansky, a former CMS official and later consultant to EHR, alleged EHR caused hospitals to submit false Medicare inpatient claims from about 2006 through his amended complaint in 2019.
- Polansky filed the qui tam complaint in 2012 under seal; after a DOJ investigation the Government declined to intervene and Polansky proceeded and the case was unsealed.
- The district court managed the large case (phase-based claims, bellwether claim process), discovery proceeded, and substantial resources were expended.
- In 2019 the Government—having previously declined—filed a motion to dismiss under 31 U.S.C. § 3730(c)(2)(A) without formal prior intervention; the district court granted dismissal after a hearing.
- The Third Circuit considered (1) whether the Government must intervene before moving to dismiss and (2) what legal standard governs such a dismissal; it affirmed the district court.
Issues:
| Issue | Plaintiff's Argument (Polansky) | Defendant's Argument (Government / EHR) | Held |
|---|---|---|---|
| Whether DOJ must intervene before moving to dismiss under § 3730(c)(2)(A) when it previously declined to proceed | DOJ cannot use § 3730(c)(2)(A) unless it has proceeded/intervened; once DOJ declines the relator has exclusive right to conduct the action | § 3730(c)(2)(A) is a standalone grant permitting DOJ to move to dismiss at any time without intervening | DOJ must intervene (or move to intervene showing good cause) under § 3730(c)(3) before seeking dismissal under § 3730(c)(2)(A) |
| Whether DOJ may seek to intervene later and the standard for doing so | Relator says later intervention cannot strip relator’s rights; if allowed, should be narrowly cabined | DOJ can intervene later on good cause; intervention preserves Executive control | DOJ may intervene later upon a showing of good cause; intervention restores DOJ to a posture of "proceeding with the action" under § 3730(c)(1) |
| Standard governing a Government motion to dismiss under § 3730(c)(2)(A) once DOJ is a party | Relator urges meaningful judicial oversight beyond mere deference (reject unfettered) | DOJ urges deference (unfettered) or minimal review; alternative circuits use "rational relation" test | DOJ-as-intervenor is a party and dismissal motions are governed by Federal Rule of Civil Procedure 41(a); Rule 41(a)(1)/(2) and court discretion apply (subject to constitutional limits) |
| Whether district court abused discretion in granting DOJ’s dismissal motion here | Polansky argued dismissal was arbitrary and failed sufficient review of potential recovery; dismissal prejudiced relator | DOJ cited litigation burdens, privilege/discovery disputes, narrowing of relator’s claims and other practical reasons supporting dismissal | Third Circuit found no abuse of discretion: construed DOJ filing as including motion to intervene, DOJ satisfied good-cause inquiry, and Rule 41(a)(2) dismissal was within district court’s discretion |
Key Cases Cited
- United States v. McNinch, 356 U.S. 595 (1958) (historical context for FCA and wartime contractor fraud)
- Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) (Article III standing and framework of qui tam relator rights)
- Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) (DOJ argued to have an unfettered right to dismiss under § 3730(c)(2)(A))
- United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998) (adopted a "rational relation" standard for DOJ dismissal)
- Ridenour v. Kaiser-Hill Co., 397 F.3d 925 (10th Cir. 2005) (concluded DOJ need not intervene before moving to dismiss)
- United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503 (6th Cir. 2009) (held § 3730(c)(2)(A) applies only when government proceeds with the action)
- United States ex rel. CIMZNHCA, LLC v. UCB, Inc., 970 F.3d 835 (7th Cir. 2020) (held DOJ must intervene on good cause before dismissing and applied Rule 41 standards)
- In re Bath & Kitchen Fixtures Antitrust Litig., 535 F.3d 161 (3d Cir. 2008) (Rule 41(a)(1)(A) pre-answer dismissal is automatic)
- Carroll v. E One Inc., 893 F.3d 139 (3d Cir. 2018) (Rule 41(a)(2) dismissal reviewed for abuse of discretion)