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HEALTH CARE LAW BRIEF

Proskauer's perspective on health care law and business


RECENT SUPREME COURT CASE AFFIRMS GOVERNMENT’S POWER TO DISMISS QUI TAM SUITS

By Matthew J. Westbrook, Ryan P. Blaney & Vinay Kohli on July 19, 2023

On June 16, 2023, the Supreme Court (the “Court”) in United States ex rel.
Polansky v. Executive Health Resources affirmed the federal government’s power
to dismiss a False Claims Act (“FCA”) action brought under the qui tam
provisions whenever it chooses to intervene. Polansky is the second FCA case
this summer in which the Court has ruled in favor of the federal
government—i.e., the Department of Justice, acting through the Attorney General
(“DOJ”). Writing for an 8-1 majority, Justice Kagan explained that DOJ receives
considerable deference, even over the objection of the individual who raised the
action (i.e., the relator or whistleblower), to dismiss cases that are
inconsistent with DOJ’s interests.





By way of background, in an FCA suit filed by a relator, DOJ has the right to
intervene in the case, usually while the case remains under seal. If it
intervenes, DOJ becomes the primary mover and, thus, may later move to dismiss
the case. However, if DOJ declines to intervene, the relator may continue the
case, but DOJ remains a party in interest. In Polansky, the relator (Dr. Jesse
Polansky) filed a qui tam action against Executive Health Resources for
allegedly submitting fraudulent claims to the Medicare program. While DOJ
declined to intervene during the seal period, Dr. Polansky continued the case,
which underwent years of discovery, requiring substantial amounts of documents
and testimony from the federal government. By 2019, however, DOJ determined that
the case’s burdens outweighed its potential value and, thus, moved to dismiss
the case under 31 U.S.C. § 3730(c)(2)(A) (“Subparagraph (2)(A)”). DOJ’s motion
was filed over Dr. Polansky’s objection that DOJ lacked dismissal authority.

The District Court granted the motion, determining that DOJ had reached a “valid
conclusion based on the results of its investigation” to dismiss the case. The
Third Circuit Court of Appeals affirmed the granting of the motion, holding that
(1) a motion to dismiss implicitly is a motion to intervene, and (2) the
standard to rule on a Subparagraph (2)(A) motion to dismiss comes from Federal
Rule of Civil Procedure (“FRCP”) 41. After the Court granted review, DOJ argued
that it possessed “essentially unfettered discretion to dismiss.” By contrast,
Dr. Polansky advocated for an “arbitrary and capricious” standard of review.

The Court adopted neither parties’ standard, but rather affirmed the Third
Circuit’s “Goldilocks position.” Justice Kagan explained that no departure from
the FRCP was warranted—the standards outlined in FRCP 41 governed a request to
dismiss under Subparagraph (2)(A). Justice Kagan further explained that
applications of FRCP 41 in the FCA context differ in two respects from non-FCA
cases. First, a dismissal under Subparagraph (2)(A) requires advance notice and
an opportunity for hearing. District courts are therefore required to use this
framework to apply FRCP 41. Furthermore, district courts must consider the
interests of both the federal government and the relator as part of its analysis
to determine whether a dismissal occurs on “proper terms.”

The Court’s decision may modestly reduce the number of qui tam actions in the
future, although it is not expected to stem the growing wave that has emerged
over the past decade. Despite such notable volume increase, the rate of
intervention by DOJ has only negligibly changed. Recognizing DOJ’s right to
intervene beyond the initial seal period, potential relators may be less likely
to bring forth complaints, knowing that their efforts may result in a dismissal
years after the complaint is initiated and after years of discovery and
unrecoverable costs to both relators and their counsel.

******

Special thanks to summer associate Brandon McCoy for his contribution to this
post.

Posted in Fraud & Abuse, Health Care Litigation, Regulatory, Uncategorized
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Matthew J. Westbrook

Matt is an associate in the Corporate Department and a member of the Health Care
Group.  His practice focuses on providing regulatory compliance advice for the
Firm’s health care clients, including service providers, health plans,
operators, investors, and lenders, among others.  Matt specifically…

Matt is an associate in the Corporate Department and a member of the Health Care
Group.  His practice focuses on providing regulatory compliance advice for the
Firm’s health care clients, including service providers, health plans,
operators, investors, and lenders, among others.  Matt specifically provides
advice on fraud and abuse matters arising under the Federal False Claims Act
(FCA), Civil Monetary Penalties Law (CMPL), Federal Anti-Kickback Statute (AKS),
and Physician Self-Referral Law (Stark Law), as well as on the regulations
promulgated by the Drug Enforcement Administration (DEA) and the Department of
Health and Human Services, including the Office of Inspector General (OIG),
Centers for Medicare & Medicaid Services (CMS), and Food and Drug Administration
(FDA).

Read more about Matthew J. Westbrook
Show more Show less
Ryan P. Blaney

Ryan Blaney represents health care, life science, and technology clients in a
range of regulatory, enforcement, internal investigative and transactional
matters, with particular expertise in privacy law, life sciences and digital
health. He also has expertise in regulatory compliance, counseling clients on a…

Ryan Blaney represents health care, life science, and technology clients in a
range of regulatory, enforcement, internal investigative and transactional
matters, with particular expertise in privacy law, life sciences and digital
health. He also has expertise in regulatory compliance, counseling clients on a
range of matters, including health care fraud and abuse, third party
reimbursement, data breach issues, data privacy and security, and FDA regulatory
matters. He has substantial experience in pharmaceutical lifecycle management
and competition issues, including the Hatch- Waxman Act and Biosimilars Price
Competition and Innovations Act.

Ryan serves information technology companies, public and private health care
companies, hospitals and physician organizations, manufacturers, medical device
companies, and health plans. He guides venture capital groups, private equity
funds, investment banks, and other investors on health care regulatory issues in
connection with financing, mergers and acquisitions, and restructuring.

Ryan’s work is greatly informed by his experience as a teacher. Prior to
attending law school, Ryan earned a master’s degree in education and taught at
an under-resourced Catholic middle school. He is known for his ability to
communicate clearly and to coordinate large teams working on complex matters.
Outside of his health law practice, Ryan has been repeatedly recognized for his
public service and pro bono work. He has successfully handled numerous
education-related cases, helped establish three nonprofit organizations and
defended qualified recipients of disability benefits.

Read more about Ryan P. Blaney
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Vinay Kohli

Vinay Kohli is a partner in the Health Care Group and Litigation Department. 
Vinay is a seasoned trial lawyer with more than a decade of experience
representing clients in the health care provider industry—including hospital
systems, physicians, and post-acute care facilities as well…

Vinay Kohli is a partner in the Health Care Group and Litigation Department. 
Vinay is a seasoned trial lawyer with more than a decade of experience
representing clients in the health care provider industry—including hospital
systems, physicians, and post-acute care facilities as well as healthcare
technology and revenue cycle management companies.

Recognized for his focus and commitment to the healthcare industry, a wide range
of health care businesses use Vinay as an outside general counsel to guide them
on strategic planning issues, compliance matters, operational questions, and
reimbursement issues.  He provides regulatory, compliance, reimbursement advice
on topics that range from venture formation and risk management to an array of
contract negotiations.

He is also experienced in defending health care fraud and abuse litigation,
prosecuting managed care disputes against payors, and handling government
investigations.  He is frequently called upon to serve as lead trial counsel in
commercial litigation disputes for health care industry clients that span the
gamut from trade secret misappropriation, unfair business practices, and breach
of fiduciary claims.

Vinay received his B.B.A., magna cum laude, M.A., and J.D. from the University
of Texas at Austin in 2005, 2006, and 2009 respectively.

Prior to joining Proskauer, Vinay was a partner in the Healthcare and Commercial
Litigation groups at King & Spalding.

Read more about Vinay Kohli
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Edward S. KornreichPartner

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is
a recognized authority on the legal, regulatory and business issues related to
health care…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is
a recognized authority on the legal, regulatory and business issues related to
health care services.

Areas of Concentration

Ed works primarily on health care transactions, regulatory compliance, health
care payment and governance issues for varied providers (both for-profit and
not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach
combines sensitivity to meeting regulatory business goals with a comprehensive
and realistic assessment of the health care environment, and he is particularly
experienced in dealing with the complex issues related to integrated health care
systems.

Industry Experience

After working for the Legal Aid Society, Ed entered private practice, where he
helped represent a major public hospital corporation in a series of
reimbursement disputes with the state and federal governments, and counseled New
York area hospitals and nursing homes on reimbursement and operational issues.
Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital
Center, one of the largest teaching hospitals in New York. After leaving St.
Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Thought Leadership

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health
care integration, not-for-profit law and corporate governance issues, and the
application of federal and state anti-kickback and “Stark” laws to health care
transactions.

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Matthew J. WestbrookAssociate

Matt is an associate in the Corporate Department and a member of the Health Care
Group.  His practice focuses on providing regulatory compliance advice for…

Matt is an associate in the Corporate Department and a member of the Health Care
Group.  His practice focuses on providing regulatory compliance advice for the
Firm’s health care clients, including service providers, health plans,
operators, investors, and lenders, among others.  Matt specifically provides
advice on fraud and abuse matters arising under the Federal False Claims Act
(FCA), Civil Monetary Penalties Law (CMPL), Federal Anti-Kickback Statute (AKS),
and Physician Self-Referral Law (Stark Law), as well as on the regulations
promulgated by the Drug Enforcement Administration (DEA) and the Department of
Health and Human Services, including the Office of Inspector General (OIG),
Centers for Medicare & Medicaid Services (CMS), and Food and Drug Administration
(FDA).

Show more Show less

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