DOJ Cites Significant Costs and Burdens on Request to Dismiss Qui Tam Case

The Department of Justice has once again exercised its authority under the False Claims Act in seeking the dismissal of a relator’s qui tam lawsuit.

Government attorneys, in their motion to dismiss filed on Aug. 20, told the court that further litigation would result in imposing “significant costs and burdens on the government and waste precious judicial and government resources.”

The lawsuit, Polansky v. Executive Health Resources, Inc. was filed in 2012 by Dr. Jesse Polansky, a former employee of Executive Health Resources, a UnitedHealth subsidiary. He alleged that Executive Health perpetrated a scheme to generate higher Medicare and Medicaid reimbursements for its client hospitals by advising them to admit patients when outpatient observation would have been appropriate and less expensive.

In 2014, after “an exhaustive investigation” the government declined to intervene in the action. However, Polansky decided to pursue the case. Motions to dismiss were litigated, which the court granted in part and denied in part.

The DOJ noted that even though it had elected not to pursue the case, the defendant, EHR, “issued a series of subpoenas and corresponding Touhy requests for documents and deposition testimony to a number of federal agencies” that sought, among other things, the government’s internal communications and investigative files prior to its decision not to pursue the case, along with tens of thousands of documents from the Centers for Medicare & Medicaid, as well as testimony from current and former government employees. Touhy requests seek testimony or production of official records related to litigation in which the United States is not a party. 

The DOJ, in its motion, outlined the amount of time and effort it had put into the case, even though it was not a party to it. The efforts included the review of thousands of pages of documents, the need to respond to a half-dozen subpoenas by EHR seeking tens of thousands of pages of documents, along with testimony and participation in a number of court hearings.

The DOJ noted that the government “is entitled to prioritize how to allocate its scarce resources, and may rationally conclude that its resources can better be used for another purpose.” And, beyond those concerns, DOJ stated it remains concerned about the relator’s ability to prove a FCA violation.

While it’s always been the DOJ’s prerogative to dismiss qui tam cases, the government, in what has become known as the Granston memo, made public in 2018, outlined various factors government prosecutors should use to evaluate whether a False Claims Act case filed by a whistleblower should be dismissed.

As we wrote about previously, the increasing number of qui tam cases filed, (as many as 600 or more per year according to Granston), coupled with a static rate of government intervention, appears to have prompted the memo.

A year after the Granston memo was leaked, the DOJ filed a motion to dismiss eleven FCA lawsuits brought by a professional relator in seven judicial districts. Each suit raised the same allegations, that pharmaceutical companies and commercial outsourcing vendors violated the Anti-Kickback Statute. In April 2019, a federal judge granted the motion to dismiss.

So far, the court has not ruled in this case and based on several other similar motions to dismiss in other circuits around the country, the outcome may not necessarily be a slam dunk for the government. One federal court judge has ruled that the government cannot simply exercise “unfettered discretion” to dismiss a qui tam action. While others have opined that the government must satisfy the rational relationship test, meaning that, as long as the government’s actions are rationally related to a legitimate government interest, the court will grant the government’s motion.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as our ability to defend those who are the target of a whistleblower action. Contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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