United States, ex rel. Polansky v. Executive Health Resources, Inc.

THE GOVERNMENT’S AUTHORITY TO DISMISS

Petitioner Jesse Polansky argues that the government does not have statutory authority to dismiss a qui tam action after initially declining to proceed in the case as a plaintiff. Brief for Petitioner, United States, ex rel. Jesse Polansky, M.D., M.P.H. at 14. Polansky first explains that the text of § 3730(b)(4) of the FCA provides the government with a simple binary choice: the government “shall” either “proceed” with the action or decline to proceed. Id. Polansky argues that the FCA gives the relator an exclusive right to proceed with the action once the government declines to proceed. Id. at 14–15. Polansky additionally contends that “proceed” and “intervene” have distinct meanings under the False Claims Act because when the government elects to proceed with the action, it has exclusive rights, but when the government intervenes, a court cannot allow that intervention to limit “the status and rights of the [relator].” Id. at 23, 25. Polansky thus argues that the government never has statutory authority to dismiss an action it initially declined to proceed with, even if it later intervenes, since that would necessarily limit the status and rights of the relator. Id.

Turning to the structure of the FCA, Polansky argues that the provision the government cites for its dismissal authority, § 3730(c)(2)(A), is only applicable when the government has proceeded with the action. Id. at 14. Polansky argues that the rest of § 3730(c)(2) grants the government trial rights which presuppose that it is directing the action, which it would only be doing if it proceeded as a plaintiff at the outset. Id. Polansky contends this indicates that Congress meant the government’s dismissal authority to apply only in this context. Id. at 19. In contrast, Polansky observes, other paragraphs are respectively applicable “where the Government elects not to proceed” and “[w]hether or not the Government proceeds.” Id. at 18. According to Polansky, this shows that Congress would have put the provision granting the government dismissal authority in another subsection had it intended the government to retain that dismissal authority after initially declining to proceed with a case. Id. at 21.

Pointing to the history of the statute, Polansky notes that the original version of the FCA did not contain any provision allowing the government to take over an action. Id. at 26. Polansky asserts that the FCA as currently amended preserves this “traditional restriction” against the government overriding a relator where the government has declined to proceed. Id. at 27. Polansky argues that the statutory design demonstrates that Congress’ goal was to give the government ample opportunity and incentive to take over appropriate cases at the outset. Id. at 29. In cases where the government declines to take on the action, Polansky argues, Congress’ goal was to incentivize relators to pursue claims without fear of government dismissal. Id. at 30. Polansky asserts that the government’s interests remain adequately protected even where it has declined to proceed in an action, making it unnecessary for the government to retain dismissal authority. Id. at 29–30. Polansky points to both § 3730(c)(3) and the government’s independent authority to resist discovery and safeguard disclosures. Id. Polansky argues that, given these protections, EHR’s Take Care Clause argument is meritless. Id. at 33.

Respondent Executive Health Resources, Inc. (“EHR”) counters that the text and structure of the FCA permit the government to dismiss a qui tam suit at any time, and that, at a minimum, the government can dismiss after intervening. Brief for Respondent, Executive Health Resources, Inc., at 16, 20. EHR argues that § 3730(c)(2) does not explicitly limit its applicability to where the government has elected to proceed. Id. at 17–18. EHR contrasts this with other paragraphs, such as § 3730(c)(3), which explicitly provides that it applies only where the government declines to proceed. Id. Thus, according to EHR, Congress’ choice to omit similar language from § 3730(c)(2) is significant and suggests the government’s dismissal authority is broad. Id. EHR argues that, far from being exclusive, a relator’s status and rights are subject to statutory limitations that afford the government control regardless of whether it initially declines the action. Id. at 21. EHR argues that, at a minimum, the government can assert its authority to dismiss after intervening in a case. Id. at 21–22. EHR argues that intervening is merely the first step in proceeding. Id. EHR thus argues that, once the government has intervened, it can activate its authority to dismiss under § 3730(c)(2)(A) without limiting the status and rights of a relator in a manner that the FCA proscribes. Id.

EHR additionally contends that reading the FCA to deprive the government of dismissal authority after it initially declines to proceed with an action would render the statute unconstitutional; thus, the FCA either cannot be read that way or must be struck down. Id. at 22. EHR notes that the Constitution places all executive power in the President. EHR further notes that the Take Care Clause imposes upon the President a duty to ensure the laws are faithfully executed. Id. at 22–23, 30. EHR argues that this responsibility entitles the President to exercise “substantial” control over executive functions. Id. at 25–26. EHR asserts that prosecuting fraud on the United States is an executive function. Id. at 22. EHR further contends that, because qui tam provisions delegate executive power to private individuals, they are inherently in tension with constitutional principles. Id. at 24. According to EHR, the FCA does not give the President substantial enough control even where it is interpreted to allow the government to dismiss declined qui tam actions without limitation. Id. at 28. EHR maintains that courts have upheld the FCA despite its questionable constitutionality on the assumption that the government retains substantial executive control through an unrestricted ability to dismiss a qui tam action. Id. at 28–29. EHR also maintains that the FCA would violate the Appointments Clause if it gave relators exclusive authority to litigate on behalf of the United States. Id. at 35–36. This, according to EHR, is because only officers appointed by the President with the advice and consent of the Senate, as the Appointments Clause requires, can wield such authority. Id. EHR argues that Polansky’s reading would so empower relators as to make them officers under the Constitution whose appointments would have to conform with the Appointments Clause. Id.

WHETHER JUDICIAL REVIEW APPLIES, AND, IF SO, WHAT STANDARD COURTS MUST USE

Polansky argues that, even if the government retains dismissal authority, dismissals must satisfy rational basis review, meaning that the government must point to a valid government interest and demonstrate a rational connection between dismissal and that interest. Brief for Petitioner at 40. Polansky argues that the FCA vests a relator with a property interest (the cause of action) which the government cannot deprive the relator of without constitutional scrutiny. Id. This, according to Polansky, is because allowing the government to arbitrarily dismiss qui tam actions at any time would violate due process. Id. Polansky notes that both the Ninth Circuit and Tenth Circuit have adopted rational basis review in similar cases. Id. at 35.

Polansky also argues that the Third Circuit erred in applying Federal Rule of Civil Procedure 41, which governs dismissal in ordinary civil cases. Id. at 35–40. Polansky maintains that Rule 41 envisions a single plaintiff dismissing its own suit, not the government as a non-party intervening to dismiss the original plaintiff’s action. Id. at 39. Polansky argues that the FCA affords protections which go beyond Rule 41 and are necessary to protect the interests of relators because relators invest considerable time and sums of money in litigating these actions as private parties. Id.

EHR, on the other hand, argues that the government’s dismissal is not subject to any standard of judicial review. Brief for Respondent at 42. EHR explains that the Constitution entrusts the President with unreviewable prosecutorial discretion to prosecute wrongs allegedly committed against the United States. Id. EHR reasons that a decision to dismiss an ongoing action is an exercise of prosecutorial discretion, just like declining to prosecute in the first instance. Id. at 30. EHR asserts that exercises of prosecutorial discretion require a complicated balancing of factors that is ill-suited to judicial review. Id. at 46. EHR adds that subjecting prosecutorial discretion to judicial review would infringe upon separation-of-powers principles. Id. at 42. EHR also asserts that Polansky cannot invoke due process as a basis for requiring judicial review because his property right would not materialize until his claim prevails. Id. at 48. EHR further argues that, even if rational basis review applies, the lower courts have already concluded that dismissal in the present case was appropriate under any standard. Id. at 48–49.