U.S. Supreme Court weighs Justice Dept.'s ability to toss whistleblower cases

  • Supreme Court considers when and how DOJ can dismiss whistleblower cases
  • Justice Alito questions if "we feel like it" good enough reason

(Reuters) - The U.S. Supreme Court on Tuesday wrestled with whether and how the U.S. Justice Department can dismiss lawsuits brought by whistleblowers on the government's behalf over their objections as it weighed reviving a fraud case against a UnitedHealth Group Inc unit.

The justices appeared unlikely to prevent the Justice Department from dismissing whistleblower lawsuits filed under the False Claims Act in instances in which the government initially declines to exercise its right to take over the cases.

But some of the justices asked whether the department must first give a reason before tossing a case without a whistleblower's consent and whether a statutory provision requiring it to provide "good cause" when it belatedly joins a case covers dismissals too.

Justice Samuel Alito asked whether it would be enough for the government to say "we move to dismiss because we feel like it or we move to dismiss because we consulted an astrologist or there's political pressure to dismiss this case."

The court was reviewing a 3rd U.S. Circuit Court of Appeals' decision upholding the dismissal of a lawsuit alleging UnitedHealth's Executive Health Resources unit defrauded Medicare by falsely certifying hospital admissions as medically necessary.

Jesse Polansky, a former employee, sued the company in 2012 under the False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover money paid out based on false claims in exchange for a cut of any recovery.

Whistleblower cases have resulted in $48.2 billion in recoveries from 1987 to 2021, according to Justice Department data. But most of that came from the 20% of cases that the government exercised its right to join and take over, with cases whistleblowers litigated alone netting $3.5 billion in the same time period.

Business groups like the U.S. Chamber of Commerce say the fact that few cases where the government did not intervene are successful show why the Justice Department should dismiss "meritless" whistleblower cases, as it started doing more often under a 2018 policy.

Polansky had been litigating his case for years when the Justice Department sought its dismissal in 2019, citing concerns including the "tremendous" burden of requests in discovery for documents from the government.

The company had denied wrongdoing, and its lawyer, Mark Mosier of Covington & Burling, argued the department had the right to dismiss the case over Polansky's objections.

"The enforcement of federal law cannot be left solely to private relators seeking financial gain," he said.

But Daniel Geyser, Polansky's lawyer at Haynes and Boone, said the government cannot unilaterally toss a case after declining at its outset to join it.

"If a False Claims Act case goes forward, it is precisely because the executive has effectively said that it can," Geyser said.

"But things can change," Justice Brett Kavanaugh responded. "The discovery can reveal new facts, there could be a new administration that comes in, there could be burdens on the agency that were not apparent at the outset."

No federal appeals court has ever held that the Justice Department could not dismiss a case it initially did not join, Assistant Solicitor General Frederick Liu said, though they split on how the department can go about doing so.

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 HER: Mark Mosier of Covington & Burling

For the government: Frederick Liu of the Justice Department

Read more:

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

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

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

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Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.