Supreme Court to consider whether U.S. can drop whistleblower cases

(Reuters) - The U.S. Supreme Court on Tuesday agreed to hear a case over whether the federal government can dismiss a whistleblower lawsuit brought on its behalf without the whistleblower's consent, an issue that has divided appeals courts.

The case was brought against UnitedHealth Group Inc subsidiary Executive Health Resources Inc by a former employee, Jesse Polansky, who accused the company of falsely certifying inpatient hospital admissions as medically necessary, resulting in Medicare being overbilled by potentially billions of dollars.

Polansky had petitioned the Supreme Court in January to hear his appeal after the 3rd U.S. Circuit Court of Appeals last year ruled that the U.S. Justice Department could have his case thrown out over his objection.

Lawyers for EHR and Polansky did not immediately respond to requests for comment. EHR has denied the allegations in court filings.

A spokesperson for the U.S. Department of Justice declined to comment. It had opposed Polansky's petition to the Supreme Court.

The federal False Claims Act allows private whistleblowers to sue a company for fraud on behalf of the government. The government may or may not intervene in such a case, and the whistleblower receives a portion of any recovery.

Polansky sued EHR in 2012 in the Eastern District of Pennsylvania. The government did not initially intervene, but in 2019 successfully asked U.S. District Judge Michael Baylson to dismiss the case.

Polansky appealed, arguing that the government had no authority to dismiss a case after initially declining to intervene. He said that even if the 3rd Circuit rejected that argument, it should still require the government to show a "valid government purpose" for the dismissal.

The government, on the other hand, maintained that it could dismiss whistleblower lawsuits at will at any time.

The 3rd Circuit rejected both arguments but upheld the dismissal, finding that the government was allowed to dismiss the case as long as doing so did not prejudice a party.

In 2018, the then-director of the U.S. Department of Justice's Civil Fraud Section told department attorneys in a memorandum to seek dismissal of "meritless" or "parasitic" whistleblower lawsuits, saying it would conserve resources and avoid unfavorable precedents in weak cases.

Circuits have split several ways on the Justice Department's authority to dismiss the cases. The 7th Circuit has adopted a similar standard to the 3rd Circuit in Polansky's case, while the 8th and 9th Circuits have held that dismissal must have a valid government purpose.

The D.C. Circuit has held that the government can dismiss whistleblower cases at will. The 1st Circuit has found that it must first give the whistleblower a chance to change its mind at a hearing.

The case is United States ex rel. Polansky v. Executive Health Resources Inc, U.S. Supreme Court, No. 21-1052.

For Polansky: Daniel Geyser of Haynes and Boone

For EHR: Ethan Posner of Covington & Burling

For the government: Solicitor General Elizabeth Prelogar

Read more:

Government needs court order to drop whistleblower cases -3rd Circuit

DOJ's dismissal of whistleblower's fraud case against drugmakers upheld

U.S. to seek dismissal of 'meritless' whistleblower cases - memo

Our Standards: The Thomson Reuters Trust Principles.