Supreme Court Ruling Helps with Meritless False Claims Act Lawsuits
The U.S. Supreme Court issued an important ruling that will help healthcare organizations and practitioners gain relief from meritless whistleblower lawsuits under the False Claims Act (FCA).1
Under the FCA, a whistleblower may file suit on behalf of the United States against a healthcare organization that commits fraud in Medicare or Medicaid. The Department of Justice (DOJ) decides whether to intervene (i.e., to join the lawsuit). In the case of United States ex rel. Polansky v. Executive Health Resources, Inc., the Supreme Court determined the DOJ can move to dismiss a whistleblower action at any time, including after DOJ decides not to intervene.
Previously, the various circuit courts took different approaches to how the court should respond to a request from DOJ to dismiss the whistleblower case, says Jose Vela, Jr., JD, senior counsel with Clark Hill in Chicago. Vela served as an Assistant U.S. Attorney for more than 20 years.
Whistleblowers Still Proceed
Generally, DOJ would allow whistleblowers to proceed with the case after DOJ declined to intervene because it did not see enough merit in the claim of fraud, Vela notes. In his experience, if Vela declined to intervene, most whistleblowers would decide to dismiss the case.
“But there are those who wanted to proceed for a variety of reasons. The office would allow them to proceed with the case,” Vela says. “I would say the majority of the time, those cases get dismissed anyway. They didn’t get very far.”
Fighting those whistleblower cases still cost the healthcare defendant substantial money, time, and effort, Vela notes.
In cases in which DOJ recommended dismissal, plaintiffs would sometimes disagree and argue the DOJ had no right to do so. The Supreme Court determined that nothing in the FCA barred the DOJ from moving to dismiss after it decides not to intervene.
“Now, if the healthcare organization learns that there is a whistleblower case, and if in the end the government finds that there’s no evidence of fraud and they’re going to decline intervention in the case, they should make it part of their pitch to the government to ask them to dismiss the case,” Vela says. “Organizations are in a much better position to ask the government to go ahead and dismiss these cases and not allow the whistleblowers to proceed with a case that, quite frankly, could last years. If there are interlocutory appeals, it could go back and forth from the district court to the court of appeals, and that can take so much time, money, and damage to your reputation.”
- Jose Vela Jr., JD, Senior Counsel, Clark Hill, Chicago. Phone: (713) 951-5607.
The U.S. Supreme Court issued an important ruling that will help healthcare organizations and practitioners gain relief from meritless whistleblower lawsuits under the False Claims Act.
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