Issues & Trends
FBA Qui Tam Conference Reviews Key Developments in FCA Litigation
February 21, 2023
The government secured more than $2.2 billion in False Claims Act (FCA) settlements and judgments in 2022,
demonstrating the importance of FCA litigation and the critical role whistleblowers play in protecting the public.
In a recorded keynote speech at the Federal Bar Association’s annual Qui Tam Conference on February 16–17, Senator Chuck Grassley (R–Iowa) said the FCA is the government’s “most powerful tool” to combat fraud, but that “it’s the brave whistleblowers who make the law successful.”
The FCA establishes a cause of action for individuals to sue when the government has been defrauded. Suits under the act are given the regal moniker qui tam — “in the name of the king” — though the practitioners who bring qui tam suits, called relators, actually represent the taxpayers.
“Whistleblowers are the government’s eyes and ears in uncovering and deterring fraud. Without you, whistleblowers, the False Claims Act would simply not work,” Grassley said.
In one of the conference highlights, panelists provided a roundup of the most significant FCA cases in 2022, several of which will be decided in the coming weeks and months, including United States ex rel. Schutte v. Supervalu Inc. This U.S. Supreme Court case centers on whether and when a defendant’s understanding about the lawfulness of its conduct is relevant to deciding if it “knowingly” violated the FCA. The lower court stated that subjective intent to defraud the government didn’t matter so long as there was a reasonable ambiguity in a statute or regulation. “Such an absurd reading is such a complete departure both from the text of the False Claims Act and over a hundred years of common law precedent,” said Grassley. “It also ignores the importance of subjective intent, which every first-year law student is taught.”
Jessie Liu, litigation partner at Skadden, Arps, Slate, Meagher & Flom LLP focusing on white collar defense and investigations, discussed the Supreme Court case United States, ex rel. Polansky v. Executive Health Resources, Inc., in which the government argued last December that it had the authority to request the dismissal of a suit brought on its behalf over the objections of the relator. Whistleblower Jesse Polansky brought a lawsuit accusing the company of submitting millions of dollars in false Medicare bills.
While noting the danger of predictions, Liu said she expected the government would win. “The question is, by how much?” she said. “The court is more than just a rubber stamp on the government’s dismissal authority, but the bar for what the government has to show is relatively low.”
Liu added that in courtroom discussion it was generally agreed that the government could not seek dismissal without a reason, but there remains significant latitude regarding how specific the government’s purpose would need to be in seeking dismissal, or the limitations on its reasons for doing so. She cited an exchange between the Assistant to the Solicitor General Frederick Liu and Justice Sonia Sotomayor in which the former asserted that political pressure might be a valid purpose for seeking dismissal.
Tejinder Singh, partner at Sparacino PLLC, has been involved in the Polansky litigation. He generally agreed with Liu’s assessment that the government would prevail. What he thought was strange about the case was the relator’s textual argument that the government could only intervene after declining to do so without limiting the status and rights of the relator.
“That’s got to mean our right to be the plaintiff,” he said. “At a minimum, that’s the most basic right we have, to conduct the action. It’s right there in the statute, and so, what that must mean is that if you don’t move to dismiss up front, you can never do it.”
“I saw this argument when they made it, [and] I said, mmm, zesty! This is some hot textualism,” Singh said to the amusement of his colleagues. He expressed disappointment that the issue wasn’t raised in oral argument, given the constitution of the current Court.
“They just sort of walked right past both what I regard as the relator’s most interesting argument and, also, the only way the relator would ever win,” he said. Singh felt that the government would easily overcome any scrutiny standard applied to its dismissal authority.
Claire Sylvia, partner at Phillips & Cohen LLP, offered a contrasting opinion. She said the Court would be inclined to rest its decision on the requirement that the government have good cause for its late intervention in the case. “It’s also a textualist argument, and it makes a lot of sense. It actually imposes a standard that the government has to comply with,” she said.
Sylvia pointed to recent cases in which government intervention had been denied because of failure to show good cause as evidence that such a requirement could have teeth. Sylvia and Singh briefly commiserated on arguments in support of good cause showing requirements that were included in their respective briefs in the case, expressing their shared hope that the requirement would serve as an effective check on government intercession.
Which is not to say that the government is hostile to the FCA. In fact, last year Grassley introduced the False Claims Amendments Act of 2021, a bill he said he intends to reintroduce this year.
In addition to praising the efforts of qui tam attorneys in attendance at the conference, Grassley warned that activist judges and legislators continue to seek to undermine the FCA, which he said was responsible for recovering more than $70 billion in government funds since the 1986 amendments.
