US Supreme Court Grants Justice Department Authority to Dismiss Whistleblower Cases

In a 8-1 ruling, the U.S. Supreme Court affirmed the power of the Justice Department to unilaterally dismiss lawsuits filed under the False Claims Act. This law enables whistleblowers to sue companies on behalf of the government, aiming to recover taxpayer funds that were obtained based on false claims. Whistleblowers are typically entitled to a portion of any recovered amount.

The ruling upheld a previous decision by a lower court, which allowed the Justice Department to dismiss a lawsuit against a unit of UnitedHealth Group Inc brought by a former employee named Jesse Polansky. Polansky sought to prevent the department from dismissing whistleblower cases when the government initially chose not to intervene in the lawsuits.

The 3rd U.S. Circuit Court of Appeals in Philadelphia has upheld the dismissal of Jesse Polansky’s 2012 lawsuit, which accused UnitedHealth’s Executive Health Resources unit of Medicare fraud. The lawsuit alleged that the unit falsely certified hospital admissions as medically necessary.

According to data from the Justice Department, whistleblower cases filed under the False Claims Act have resulted in $48.2 billion in recoveries between 1987 and 2021. The majority of these recoveries came from cases where the government intervened and took over, while cases pursued solely by whistleblowers yielded $3.5 billion during the same period.

Business groups, including the U.S. Chamber of Commerce, argue that the low success rate of cases without government intervention highlights the importance of the Justice Department’s power to dismiss meritless lawsuits. Under a policy implemented during the administration of former President Donald Trump in 2018, the department began seeking the dismissal of lawsuits lacking merit or deemed parasitic, even if the government did not support them.

In 2019, the Justice Department requested the dismissal of Polansky’s lawsuit, citing various concerns, such as the significant burden of document production requests on the government. Executive Health Resources, the defendant in the case, denied any wrongdoing and contended that the department had the authority to dismiss the lawsuit despite Polansky’s objections.