For the February 2023 issue of the American Bar Association’s (ABA) Health Lawyer, the flagship publication of the ABA Health Law Section, I authored an article entitled “Recent False Claims Act Developments at the Supreme Court.”
“Since 2018, the Department of Justice has recovered nearly $14 billion from FCA [False Claims Act] settlements and judgments, with more than 80% of those recovering coming from the healthcare industry,” I explained in the article. “For this reason, any potential activity at the U.S. Supreme Court involving the FCA draws attention of healthcare attorneys and providers.”
In fact, several certiorari petitions before the Supreme Court over the past year concern significant FCA issues, including:
- The government’s ability to dismiss the qui tam complaint of a whistleblower or relator.
- The requisite details for FCA allegations to satisfy Federal Rule of Civil Procedure 9(b) and proceed to discovery.
- Whether an objective scienter standard applies in FCA actions.
Each of these petitions are at different stages and will remain noteworthy throughout 2023.
First, the Supreme Court granted certiorari in United States ex rel. Polansky v. Executive Health Resources, Inc., which will have the Court address whether the government has the authority to dismiss an FCA qui tam case after initially declining to proceed with the action and what standard applies if the government has that authority. I noted how significant this decision would be if it sided with the plaintiff, although that may be unlikely for a variety of reasons, saying “If the government lost its dismissal authority with a declination decision, the government presumably would invest more time and resources into its investigations of qui tam allegations and seek even more extensions of the FCA’s seal period to prolong those investigations.”
Second, the Supreme Court denied three separate certiorari petitions requesting to address a long-standing divergence among courts on the level of factual detail a relator must plead in a qui tam complaint to satisfy Federal Rule of Civil Procedure 9(b), which leaves FCA litigants likely to continue facing different approaches to the pleading standards depending on circuit or district for the foreseeable future.
Third and perhaps most notably, the Supreme Court granted certiorari petitions in January 2023 to review two cases that will address the objective scienter standard and its application to the FCA in determining whether a defendant “knowingly” defrauded the federal government. The current standard was derived from a 2007 Supreme Court decision in Safeco Insurance Co. v. Burr related to violations under the Fair Credit Reporting Act, where the government or relator must demonstrate that the defendant acted “knowingly,” which the statute defines to include “actual knowledge,” “deliberate ignorance,” or “reckless disregard,” and the two cases proceeding to the Court will address whether that standard also applies to the FCA. The opinion in this case is expected in June 2023.
For the full article and a deeper dive on the legal matters and issues described above, please click here (ABA membership required).