907 F.3d 187
5th Cir.2018Background
- Four relators (board-certified allergists) filed a qui tam FCA suit (2013) alleging United Biologics billed government payors for unnecessary/unsupported allergy treatments and paid kickbacks to contracting physicians.
- The Government investigated nationwide, obtained repeated extensions to decide whether to intervene, and ultimately declined to intervene in this Texas-filed case; a separate qui tam (Nix) was filed in Northern District of Georgia.
- The Vaughn relators entered a sharing agreement with the Nix relator, later sought to dismiss their Texas suit "with prejudice as to them but without prejudice as to the Government," and waived future claims under the sharing agreement if dismissal were allowed.
- The district court held a hearing, required the Government to attend, and granted the relators’ motion: case dismissed with prejudice as to the relators only; Government was not dismissed.
- United appealed, arguing the dismissal improperly affected the Government, that §3730(b)(1) required written reasons for consent, that the explanation was inadequate, and that Rule 41(a)(2) dismissal was an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the non-intervening United States can be dismissed (with or without prejudice) when relators voluntarily dismiss themselves with prejudice | Vaughn: dismissal may be limited to relators; Government’s interests are protected and it consented | United: relators’ dismissal should bind the Government or at least be without effect absent explicit protection for the Government | Court: Government was never a "party" (it did not intervene), so the district court correctly declined to dismiss the United States; whether Government is bound by relators’ voluntary quit is a merits/preclusion question for the Georgia court |
| Whether 31 U.S.C. § 3730(b)(1) requires a written explanation for the Government’s consent to dismissal | Vaughn: written consent was provided; no separate writing of reasons required | United: statute requires written reasons for consenting, so Government’s oral/informal justification was inadequate | Court: "written" modifies consent but not plainly the Government’s reasons; statute requires written consent, not written statement of reasons; no textual basis for requiring written reasons |
| Whether the Government and district court provided an adequate explanation for consenting to dismissal | Vaughn: Government attended hearing and explained it would pursue the separate Georgia action; dismissal would not harm Government interests | United: Government’s explanation was too vague and strategic nondisclosure is insufficient | Court: explanation (oral at hearing and the record) sufficed; Government has discretion to consent and need not provide a detailed justification |
| Whether granting relators’ Rule 41(a)(2) voluntary dismissal was an abuse of discretion | Vaughn: dismissal appropriate because relators were unwilling to continue absent Government intervention and other qui tam (Nix) remained | United: dismissal was tactical, prejudiced United, avoided adverse ruling, and should be denied | Court: no plain legal prejudice shown (no discovery, limited proceedings, relators dismissed with prejudice), so dismissal was not an abuse of discretion |
Key Cases Cited
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (Sup. Ct.) (non-intervening government is not a formal party; government may be a real party in interest)
- United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir.) (background on FCA qui tam purpose and procedure)
- United States ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450 (5th Cir.) (district court erred by dismissing government with prejudice when relator’s pleading-stage dismissal risked improperly binding government)
- Searcy v. Philips Electronics North America Corp., 117 F.3d 154 (5th Cir.) (non-intervening government is a passive beneficiary with broad discretion to consent to dismissals)
- Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (Sup. Ct.) (voluntary dismissals generally do not have res judicata effect that would bar later government actions)
- United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th Cir.) (final judgment on the merits by relator can bind the government under claim preclusion)
- United States ex rel. Michaels v. Agape Senior Comm., Inc., 848 F.3d 330 (4th Cir.) (§ 3730(b)(1) does not impose a judicially enforceable standard for the government’s consent)
- Taylor v. Sturgell, 553 U.S. 880 (Sup. Ct.) (nonparty preclusion principles cited regarding when a nonparty may be bound)