Polansky v. Executive Health Resources Inc. helps to answer the question what authority does the United States Government have when it declines to intervene at the outset and subsequently opposes the relator's suit? 17 F. 4th 376 (3rd Cir. 2021).
In 2012, Polansky filed an FCA action. In February 2019, the Government notified the parties that it intended to dismiss the entire action pursuant to 31 U.S.C. § 3730(c). Under paragraph (c)(1) of that section, a relator's ability to continue a suit he initiated is limited in various ways "[i]f the Government proceeds with the action." Those limits are spelled in out in paragraph (c)(2), including that "[t]he Government may dismiss the action notwithstanding the objections of the [relator]" so long as the relator receives notice and an opportunity to be heard on the Government's motion. 31 U.S.C. § 3730(c)(2)(A). Here, although the Government had originally opted not to proceed with the action and had not formally intervened, it pointed to § 3730(c)(2)(A) as the source of its authority to dismiss the case over Polansky's objection.
In August 2019, the Government filed a motion to dismiss pursuant to § 3730(c)(2)(A). The District Court accepted that filing and, following briefing and argument, granted the Government's motion. It recognized the circuit split on the issue of what standard applies to a § 3730(c)(2)(A) dismissal, but because it concluded that the Government had made an adequate showing under any of the prevailing standards, it declined to weigh in.
On appeal, Polansky challenges the District Court's dismissal on the ground that the Government lacked statutory authority to move to dismiss in the first place. He also contends that, if the Government did have that authority, its motion should have been denied on the merits under the applicable standard.
Affirmed—the District Court did not abuse its discretion in granting the Government's motion to dismiss. The court exhaustively examined the interests of the parties, their conduct over the course of the litigation, and the Government's reasons for terminating the action.
A. The Applicable Standard
We [ ] consider the standard applicable to the Government's motion. Is the Government automatically entitled to dismissal, or does that decision lie in the District Court's discretion? Or in practical terms, is the "opportunity for a hearing on the motion" in § 3730(c)(2)(A) merely a forum for the relator to attempt to "convince the [G]overnment not to end the case," as the Government argues, Gov't Br. 28, or is it an adversarial hearing to inform the District Court's ruling on the Government's motion?
This issue, too, has divided the Courts of Appeals, see Chang v. Children's Advocacy Center of Delaware, 938 F.3d 384, 387 (3d Cir. 2019), which have taken three paths. While the D.C. Circuit agrees with the Government that it has an "unfettered right" to dismiss, see Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003), and the Ninth and Tenth Circuits hold it to a "rational relation" standard drawn from substantive due process jurisprudence, see United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145-46 (9th Cir. 1998); Ridenour, 397 F.3d at 936, the Seventh Circuit simply applies the Federal Rules of Civil Procedure as it would to any party, see CIMZNHCA, 970 F.3d at 849-50. Today we wade into the fray, again siding with the Seventh Circuit.
Below, we discuss the standard we adopt, and then explain why we decline to follow the competing views offered by our sister Circuits.
1. The Standard We Adopt
The standard applicable to the Government's motion to dismiss follows logically from the FCA's request that the Government intervene before seeking dismissal. Having intervened, the Government becomes a party, and like any party, it is subject to the Federal Rules of Civil Procedure, including the rule governing Voluntary Dismissal.
That is Rule 41(a), which establishes different standards for a motion to dismiss depending on the procedural posture of the case. If the motion is filed before the defendant files an answer or summary judgment motion, "the plaintiff may dismiss an action without a court order" simply by filling a "notice of dismissal." Fed. R. Civ. P. 41(a)(1)(A). The effect of that notice is "automatic and immediate," such that "no order of the district court is needed to end the action," In re Bath & Kitchen Fixtures Antitrust Litig., 535 F.3d 161, 165 (3d Cir. 2008). But once the action has passed the "point of no return," id. (quoting Manze v. State Farm Ins. Co., 817 F.2d 1062, 1065 (3d Cir. 1987)), with the filing of the defendant's responsive pleading, then "an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." Fed. R. Civ. P. 41(a)(2). We see no reason for these standards to apply with less force in a qui tam action than they do in any other civil action. As this Court has recently noted, "[i]t could hardly be clearer" that Congress intended the False Claims Act to establish "civil" proceedings, i.e., "lawsuits brought in accordance with the Federal Rules of Civil Procedure," United States ex rel. Int'l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co., 5 F.4th 315, 336 (3d Cir. 2021).
Of course, the FCA does add certain wrinkles. For example, while Rule 41(a) "obviously does not authorize an intervenor-plaintiff to effect involuntary dismissal of the original plaintiff's claims," CIMZNHCA, 970 F.3d at 850, the FCA permits the Government-as-intervenor to "dismiss the action not-withstanding the objections of the person initiating the action," 31 U.S.C. § 3730(c)(2)(A). And while a pre-answer notice of dismissal under Rule 41(a)(1)(A) is self-effectuating, "invit[ing] no response from the district court and permit[ting] no interference by it," Bath & Kitchen, 535 F.3d at 165, the FCA statute, even at that stage, requires the relator be given notice and an opportunity for a hearing before the case is dismissed, 31 U.S.C. § 3730(c)(2)(A). But these small modifications do not render Rule 41(a) inapplicable. To the contrary, such modifications are expressly contemplated by the Rule itself, which functions "[s]ubject to ... any applicable federal statute." Fed. R. Civ. P. 41(a)(1)(A).
In practice, then, when the Government moves to dismiss a relator's case pursuant to § 3730(c)(2)(A), it must do so within the framework of Rule 41(a). The relator must receive notice and an opportunity for a hearing, 31 U.S.C. § 3730(c)(2)(A), and the Government must meet whatever threshold the relevant prong of Rule 41(a) requires. If the defendant has yet to answer or move for summary judgment, the Government is entitled to dismissal, Fed. R. Civ. P. 41(a)(1)(A), albeit with an opportunity for the relator to be heard, 31 U.S.C. § 3730(c)(2)(A), subject only to the bedrock constitutional bar on arbitrary Government action. See CIMZNHCA, 970 F.3d at 850-52. And if the litigation is already past that "point of no return," Bath & Kitchen, 535 F.3d at 165, then dismissal must be "only by court order, on terms the court considers proper." Fed. R. Civ. P. 41(a)(2).
As an important caveat, we note that, even in a typical case between private parties, dismissal at this later stage "should be allowed unless defendant will suffer some prejudice other than the mere prospect of a second lawsuit," Estate of Ware v. Hosp. of the Univ. of Pa., 871 F.3d 273, 285 (3d Cir. 2017) (quoting In re Paoli R.R. Yard PCB Litig., 916 F.2d 829, 863 (3d Cir. 1990)), and that rule carries particular force, with constitutional implications in an FCA case, where it is the Government seeking to dismiss a matter brought in its name. See 31 U.S.C. § 3730(c)(1) (requiring that, once the Government has intervened in an FCA action, "it shall have the primary responsibility for prosecuting the action"); id. § 3730(c)(2)(A) (allowing the Government to dismiss "notwithstanding the objections of the [relator]"); CIMZNHCA, 970 F.3d at 850 (explaining that the standards set out in Rule 41(a) are limited by "any applicable background constraints on executive conduct in general"); see also Seila Law, 140 S. Ct. at 2205 (noting that "separation of powers" is a "foundational doctrine").
2. The Alternative Approaches Among the Courts of Appeals
While we respect and have carefully weighed the considered views of other courts, we are satisfied that we have chosen the best path forward.
The D.C. Circuit has interpreted § 3730(c)(2)(A) to "give the government an unfettered right to dismiss an action." Swift, 318 F.3d at 252. It reached that conclusion by analogizing the Government's motion to the exercise of prosecutorial discretion, id., which is reserved to the executive, and reasoning that "[n]othing in § 3730(c)(2)(A) purports to deprive the Executive Branch of its historical prerogative to decide which cases should go forward in the name of the United States." Id. at 253. While the Court acknowledged that § 3730(c)(2)(A)'s hearing requirement "points to a role for the courts in deciding whether the case must go forward despite the government's decision to end it," it concluded that the "function of a hearing" is "simply to give the relator a formal opportunity to convince the government not to end the case." Id.
Appellees (alongside amicus United States Chamber of Commerce, Commerce Br. 9-10) have pressed these points with us as well, but we are unconvinced. For one, the analogy to prosecutorial discretion is too loose a fit because qui tam actions involve not just the Government but also the relator in the role of "prosecutors," each with its own interest in the action. And as Congress recognized in assuring the relator a hearing on the Government's motion, those interests can be different.
In addition, reading § 3730(c)(2)(A) to give the Government "unfettered" discretion to dismiss would make it incongruous with other provisions of the FCA. For example, § 3730(b)(1) requires "the court and the Attorney General [to] give written consent" for the relator to voluntarily dismiss an action. Appellees' reading thus would mean that the court had more of an oversight role when the Government and relator agreed to dismiss than it would when the Government wanted to force a dismissal against the relator's will. Likewise, because § 3730(c)(2)(B) requires a court to find a proposed settlement, to which a relator objects, to be "fair, adequate, and reasonable," Appellees' reading would require more judicial oversight of an opposed settlement than of a dismissal— despite the far more severe consequences for the relator. Finally, an unfettered discretion standard creates tension with § 3730(c)(2)(A)'s provision for a hearing, which implies some role for the Article III judge; in contrast, that standard would limit the court's role to "serv[ing] ... some donuts and coffee ... while the parties carry on an essentially private conversation in its presence." CIMZNHCA, 970 F.3d at 850 (internal quotation omitted).
Polansky asks us to go the other way and adopt the rational relation test promulgated by the Ninth Circuit and followed by the Tenth, which is drawn from the former's substantive due process jurisprudence. See Sequoia, 151 F.3d at 1145; Ridenour, 397 F.3d at 936. Under this test, the court requires "(1) identification of a valid government purpose; and (2) a rational relation between dismissal and accomplishment of the purpose." Sequoia, 151 F.3d at 1145. If the Government satisfies that two-prong test, "the burden switches to the relator to demonstrate that dismissal is fraudulent, arbitrary and capricious, or illegal." Id. (internal quotation marks omitted).
But neither does that slipper fit. The right against arbitrary government action may provide a constitutional floor, but the Federal Rules of Civil Procedure are built above it, and the Ninth Circuit's approach omits that structure entirely. And Rule 41(a) duly provides standards for voluntary dismissal, promulgated by the Supreme Court and with Congressional oversight.
In sum, our review of the alternate approaches confirms the one on which we have settled: When the Government declines to adopt a relator's FCA action, and the relator elects to proceed on his or her own, the Government must intervene pursuant to § 3730(c)(3) before it can seek to dismiss under § 3730(c)(2)(A). And when it does so, its motion to dismiss is governed by the provisions of Rule 41(a).
THIS CASEBOOK contains a selection of U. S. Court of Appeals decisions that analyze and discuss issues surrounding qui tam claims. Volume 1 of the casebook covers the District of Columbia Circuit and the First through the Fifth Circuit Court of Appeals. Volume 2 of the casebook covers the Sixth through the Eleventh Circuit Court of Appeals.