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FCA Qui Notes
April 23, 2024

Another One Bites the Dust: The Government Secures Its Third Federal Qui Tam Dismissal Under Its Broad (c)(2)(A) Authority Since Polansky

Qui Notes: Unlocking the False Claims Act

On April 12, 2024, in U.S. ex rel. Vanderlan v. Jackson HMA, LLC, the U.S. District Court for the Southern District of Mississippi dismissed a qui tam case based on the government’s motion to dismiss under 31 U.S.C. § 3730(c)(2)(A). This case marks the third grant of a federal (c)(2)(A) motion to dismiss since the June 2023 Supreme Court decision in U.S. ex rel. Polansky v. Executive Health Resources Inc. and may signal the government’s growing willingness to seek dismissal of FCA cases in light of Polansky.

In Jackson, relator Vanderlan sued a Jackson, Mississippi hospital (JHMA) under the FCA for its alleged practice of “patient dumping” in violation of the Emergency Medical Treatment and Labor Act (EMTALA), claiming JHMA had falsely certified compliance with EMTALA. (Patient dumping is a profit-motivated scheme wherein medical providers reject or prematurely transfer patients unable to pay for their medical care.) In addition to the relator’s EMTALA claim, Vanderlan included in his 2015 complaint a retaliation claim against JHMA for the termination of his employment with the hospital.

In 2018, the government moved under § 3730(c)(2)(A) to dismiss the EMTALA claim, arguing that the costs of litigating the matter outweighed the benefits. The district court granted the government’s motion absent any oral argument or hearing, leaving only Vanderlan’s retaliation claim remaining. After the Polansky decision, however, the district court “invited” Vanderlan to supplement his motion for reconsideration of the court’s dismissal order. Also, in light of Polansky, the government intervened in the matter without objection. The district court then severed Vanderlan’s retaliation claim into a separate action so that Vanderlan could continue to pursue this claim regardless of the outcome of the court’s reconsideration.

After conducting a de novo review of the parties’ arguments and the applicable law, the court again granted the government’s motion to dismiss. The court concluded that the government met the minimal burden established in Polansky when it offered a “reasonable argument” for why the costs of proceeding in litigation outweigh the benefits. Once this low burden was met, the government was owed substantial deference under Polansky. Though Vanderlan alleged the EMTALA violations were so exceptional that they exceeded the scope of the government’s right to seek dismissal, the court was unconvinced. Further, although Vanderlan argued that a grant of dismissal cannot precede discovery or an evidentiary hearing, the court found that Polansky suggests otherwise. Under Polansky, “[i]f the government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grant the motion,” and the term “argument” does not suggest a discovery nor an evidentiary hearing requirement. Lastly, the court rejected Vanderlan’s claim that a grant of dismissal absent discovery or an evidentiary hearing would violate his Constitutional rights. The court reasoned that it satisfied Vanderlan’s right to procedural due process by providing Vanderlan notice and an opportunity to be heard through briefing, oral argument, and proffered exhibits. Vanderlan’s right to substantive due process was satisfied by a finding that the government’s decision to dismiss was reasonable and not arbitrary or capricious.

Since Polansky, two other district courts have granted motions brought by the government under (c)(2)(A). As previously discussed in this blog, in December 2023, the U.S. District Court for the Northern District of Ohio granted a (c)(2)(A) dismissal motion in U.S. ex rel. USN4U v. Wolf Creek Federal Services. In February 2024, the U.S. District Court for the District of Maine granted a (c)(2)(A) dismissal motion in U.S. ex. rel. Sargent v. McDonough. The government moved to dismiss the case, arguing that the cost of pursuing an FCA against employees of the Department of Veterans Affairs would outweigh its benefits. Relying on Polansky, the district court granted the government’s motion, finding that “the Government reasonably foresees little-to-no gain for its efforts” and that, in the absence of extraordinary interests of the relator, the government is entitled to dismissal.

Since Polansky, two circuit courts have also affirmed pre-Polansky district court grants of dismissal brought under (c)(2)(A). In Brutus Trading LLC v. Standard Chartered Bank et al., the relator alleged that the bank facilitated illegal transactions linked to Iran in violation of U.S. sanctions and defrauded the government by concealing the extent of its illegal conduct when entering into a deferred prosecution agreement in 2012. After the district court granted the government’s motion to dismiss under (c)(2)(A) without holding a hearing, Brutus appealed, arguing that failing to hold a hearing violated the statutory hearing requirement and due process. After Polansky was decided, the court ordered that the parties submit supplemental briefing in light of that decision. In August 2023, the Second Circuit rejected Brutus’ arguments and affirmed the district court’s dismissal, finding that “the district court satisfied the hearing requirement by ‘carefully considering’ ‘the parties’ voluminous briefs, declarations, and exhibits before granting the government’s motion.’” In U.S. ex rel. Carver v. Physicians Pain Specialists of Alabama, the relator, Carver, brought an FCA suit against her employer, Physicians Pain Specialists of Alabama, alleging that the pain management clinic submitted fraudulent claims for payment to federal health care programs. When the government moved to intervene and dismiss the qui tam case under its (c)(2)(A) authority, the district court granted the government’s motion. Carver appealed. After the appeal had been briefed, the Supreme Court decided Polansky. Relying on Polansky, the Eleventh Circuit affirmed the lower court’s grant of dismissal, finding that the government provided “good grounds for thinking that this suit would not do what all qui tam actions are supposed to do: vindicate the [g]overnment’s interests.”

Together, Wolf Creek, Sargent, and, most recently, Jackson may indicate both the government’s increasing willingness to exercise its broad dismissal authority under 31 U.S.C. § 3730(c)(2)(A) after Polansky, as well as the courts’ acceptance of that authority. Stay tuned to Qui Notes as we continue to monitor the outcomes of post-Polansky (c)(2)(A) dismissal motions. For our previous discussions of the Polansky decision, see the following Qui Notes posts:

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.