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

599 U.S. 419
Supreme Court of the United States·Decided June 16, 2023·No. 21-1052·Published·Cited by 74 cases

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UNITED STATES ex rel. POLANSKY v. EXECUTIVE HEALTH RESOURCES, INC., et al.

certiorari to the united states court of appeals for the third circuit No. 21–1052. Argued December 6, 2022—Decided June 16, 2023 The False Claims Act (FCA) imposes civil liability on any person who presents false or fraudulent claims for payment to the Federal Government . See 31 U. S. C. §§ 3729–3733. The statute is unusual in authorizing private parties (known as relators) to sue on the Government's behalf. Those suits—qui tam actions—are “brought in the name of the Government.” § 3730(b)(1). And the injury they assert is to the Government alone. But in one sense, a qui tam suit is “for” the relator as well as the Government: If the action leads to a recovery, the relator may receive up to 30% of the total. §§ 3730(b)(1), (d)(1)–(2).

Because a relator is no ordinary plaintiff, he is subject to special restrictions . He must fle his complaint under seal and serve a copy and supporting evidence on the Government. See § 3730(b)(2). The Gov- Page Proof Pending Publication ernment then has 60 days (often extended for “good cause”) to decide whether to “intervene and proceed with the action.” §§ 3730(b)(2)–(3). If the Government elects to intervene during that so-called seal period, the action “shall be conducted by the Government”; otherwise, the relator gets “the right to conduct the action.” §§ 3730(b)(4)(A)–(B). But even if the Government passes on intervention, it remains a “real party in interest,” United States ex rel. Eisenstein v. City of New York, 556 U. S. 928, 930, and it retains continuing rights. Most relevant here, the Government can intervene after the seal period ends, so long as it shows good cause to do so. See § 3730(c)(3).

In this case, the relator—petitioner Jesse Polansky—fled a qui tam action alleging that respondent Executive Health Resources helped hospitals overbill Medicare. The Government declined to intervene during the seal period, and the case spent years in discovery. Eventually, the Government decided that the varied burdens of the suit outweighed its potential value, so it fled a motion under § 3730(c)(2)(A) (Subparagraph (2)(A) for short), which provides that “[t]he Government may dismiss the action notwithstanding the objections of the [relator],” so long as the relator received notice and an opportunity for a hearing. The District Court granted the request, fnding that the Government had thoroughly investigated the costs and benefits and come to a valid conclusion.

The Court of Appeals for the Third Circuit affrmed after considering two legal questions. First, does the Government have authority to dismiss an action under Subparagraph (2)(A) if it declined to intervene during the seal period? The Court of Appeals held that the Government has that power so long as it intervened sometime later. And the court found that the Government had satisfed that condition here. Second , what standard should a district court use in ruling on a Subparagraph (2)(A) motion? The Court of Appeals held that the proper standard comes from Federal Rule of Civil Procedure 41(a)—the rule governing voluntary dismissals in ordinary civil litigation. And here, the Third Circuit ruled, the District Court had not abused its discretion in granting the Government's motion. Held:

1. The Government may move to dismiss an FCA action under § 3730(c)(2)(A) whenever it has intervened—whether during the seal period or later on. Pp. 429–435.

(a) The Government contends that it may move to dismiss under Subparagraph (2)(A) even if it has never intervened. But Paragraph 2 (in which Subparagraph (2)(A) appears) refutes that idea. Unlike other FCA provisions, Paragraph 2 does not say that it applies when the Gov- Page Proof Pending Publication ernment is not a party. So the Government can prevail on its argument only by implication. And the implication does not ft. Subparagraphs (2)(A) and (2)(B) grant the Government uncommon power: to dismiss and settle an action over the objection of the person who brought it. That sort of authority would be odd to house in an entity that has continually declined to join a case. And subparagraphs (2)(C) and (2)(D) presuppose that the Government has intervened. Subparagraph (2)(C) enables the court to restrict the relator's role when needed to prevent interference with the “Government's prosecution of the case.” And subparagraph (2)(D) allows the court to restrict the relator's participation if the defendant would otherwise suffer an “undue burden”; here again the premise is that the Government has joined the case, else a court would be limiting the role of the defendant's sole adversary.

Zoom out to the rest of § 3730(c), and the Government's “intervention is irrelevant” view looks even weaker. Section 3730(c) addresses the “Rights of the Parties” and contains four relevant paragraphs. Paragraph 1 states that it applies only “[i]f the Government proceeds with the action”—something that the parties agree cannot happen unless the Government intervenes. And the paragraph concludes by stating that the relator may continue as a party, “subject to the limitations set forth in paragraph (2).” It thus states that when the Paragraph 1 situation obtains, the relator's role will be limited in the ways set out in Para-

graph 2. And the Paragraph 1 situation obtains only when the Government has intervened. So that is also when Paragraph 2's provisions (including the one about dismissal) kick in. In other words, the express intervention prerequisite of Paragraph 1 carries forward into Paragraph 2 through the “subject to” clause connecting the two. Only when Paragraphs 3 and 4 are reached does the necessity of intervention drop away, as those paragraphs (unlike Paragraph 2) specify the circumstances in which they apply: Paragraph 3 applies when “the Government elects not to proceed,” and Paragraph 4 applies “[w]hether or not the Government proceeds.” And just to pile on a bit, the Government's alternative construction creates surplusage twice over, violating the interpretive principle that “every clause and word of a statute” should have meaning. Montclair v. Ramsdell, 107 U. S. 147, 152. So absent intervention, Paragraph 2 does not apply, and the Government cannot fle a motion to dismiss. Pp. 430–432.

(b) A straightforward reading of the FCA refutes Polansky's position that Paragraph 2 (as linked to Paragraph 1) applies only when the Government's intervention occurs during the seal period. Recall that the Government can intervene either during the seal period or “at a later date upon a showing of good cause.” § 3730(c)(3). A successful motion to intervene turns the movant into a party. And once the Gov- Page Proof Pending Publication ernment becomes a party, it (alongside the relator) does what parties do: It “proceeds with the action.” That phrase, again, is the trigger for Paragraph 1: When the Government “proceeds with the action,” it assumes “primary responsibility” for the case's “prosecuti[on].” And for the reasons above, whenever that is true, Paragraph 2 kicks in too. So the right to dismiss under Subparagraph (2)(A) attends a later intervention , just as it does an earlier one.

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United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023).

599 U.S. 419 (United States ex rel. Polansky v. Executive Health Resources, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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