Firm Lawyers Await Supreme Court Decision Involving Whistleblower Lawsuits

The U.S. Supreme Court will review a case brought originally by a relator on behalf of the federal government in 2012. The justices will consider:

• whether the Department of Justice (DOJ) can dismiss qui tam suits brought under the False Claims Act (FCA), despite a relator’s objection, and
• if the agency can do so after refusing to intervene in such a case, known as a qui tam action.

The Court will also have the opportunity to consider the standard of review that should apply when the DOJ dismisses FCA suits.

Under the FCA, the federal government can file a lawsuit on its behalf to reclaim money that was acquired deceptively and additional money damages and penalties.  The law also permits a whistleblower (relator) to bring a lawsuit on behalf of the government. The government can then intervene and prosecute qui tam cases or allow the relator to proceed alone. FCA also gives the DOJ power to dismiss such actions upon notice to the relator and despite the relator’s objections.

The Supreme Court is reviewing the DOJ’s authority to dismiss qui tam cases as the agency has begun dismissing such claims more frequently. A January 2018 memo by Michael Granston (the Granston memo), the former director of the DOJ’s Commercial Litigation Branch, instructed the agency’s lawyers to consider more thoughtfully and thoroughly whether to seek affirmative dismissals of potentially meritless FCA cases (Granston Memo). Since then, the DOJ has dismissed at least 50 qui tam actions.  Before the Granston Memo, DOJ exercised its dismissal authority only 45 times in approximately 30 years.

In the current FCA pending case before the Supreme Court, the relator filed his FCA claim in 2012 accusing of overbilling Medicare by falsely certifying inpatient services as medically necessary.  The government refused to intervene two years later.  But it did not seek to dismiss the case until 2019, after seven years of costly litigation borne by the relator. The DOJ contends the FCA vests the government with “complete discretion” to dismiss an FCA lawsuit at any point in the litigation.

Hopefully, the Court’s decision will address the government’s authority to dismiss a qui tam suit where it failed to intervene and resolve disagreements among circuit courts regarding the appropriate standard of review for dismissals under the FCA.  These standards have ranged from one circuit granting DOJ “unfettered” discretion to dismiss qui tam cases to another circuit requiring the DOJ to demonstrate a “rational relation between the dismissal and a valid governmental purpose.”

If the Supreme Court grants the DOJ the broad authority to dismiss cases over the objections of relators, it threatens the efficacy of the FCA.  Defendants will be more likely to actively encourage the DOJ to dismiss the lawsuit throughout the qui tam litigation well after DOJ has initially declined intervention. Such a ruling could also discourage relators from considering qui tam lawsuits out of concern that their time and resources could be wasted if the DOJ opts to dismiss their case well after its initial refusal to intervene.

If you are aware of fraud being committed against the federal or state governments, you could be rewarded for reporting the fraud.  If you have any questions about whether you qualify as a whistleblower, you can contact a lawyer at Beasley Allen for a free and confidential evaluation of your claim.  There is a contact form on the firm’s website, or you may email one of the lawyers on our whistleblower litigation team:  Lance Gould, Larry Golston, Leon Hampton, Paul Evans, Lauren Miles or Tyner Helms.