SCOTUS Ruling Weakens False Claims Act, Poses Grave Danger to Law’s Future Constitutionality

On June, 16, the U.S. Supreme Court issued a 8-1 ruling in the False Claims Act whistleblower case United States, ex rel. Polansky v. Executive Health Resources, Inc. The Court’s ruling gives the U.S. Department of Justice (DOJ) the authority to dismiss qui tam whistleblower lawsuits in cases it did not initially intervene in. While the ruling immediately threatens the efficacy of the False Claims Act’s whistleblower provisions, Justice Clarence Thomas’s dissent poses an even greater danger to the constitutionality of America’s premier anti-fraud law.

“The Supreme Court’s decision will require Congress to fix the False Claims Act to protect whistleblower rights to pursue qui tam lawsuits when the government declines to intervene,” said whistleblower attorney David Colapinto, a founding partner of Kohn, Kohn & Colapinto. “Congress should create common sense standards for the government to meet when it wants to intervene late just to dismiss a whistleblower’s case. Under the Supreme Court’s ruling the government can intervene to dismiss the case years after the whistleblower has litigated the claims on behalf of the government.”

“Even more alarmingly, today’s ruling creates a greater danger to the constitutionality of the False Claims Act,” continued Colapinto, who has represented whistleblowers under the False Claims Act for over 30 years. “Three justices of the Supreme Court have indicated a willingness to consider declaring unconstitutional the False Claims Act provisions that allow whistleblowers to litigate fraud claims on behalf of the government after the government has turned down the case. Justice Clarence Thomas’s dissent was joined by Justices Brett Kavanaugh and Amy Coney Barrett in questioning whether the whistleblower provisions of the False Claims Act violate Article II of the U.S. Constitution.”

“The position of Justice Thomas’s dissent is both dangerous and reckless,” Colapinto added. “This is a green light to every government contractor accused of fraud to argue that a whistleblower’s False Claims Act lawsuit in a declined case is unconstitutional despite the statute that says that whistleblowers can pursue these claims even if the government declines to intervene.”

“Declaring whistleblower rights under the False Claims Act unconstitutional would do great damage to a law that has been on the books for 37 years and that has helped the United States recover over $70 billion from government contractors that have defrauded taxpayers during that time,” concluded Colapinto.

In the 2022 Fiscal Year (FY 2022), the DOJ recovered only $776 million in False Claims Act whistleblower cases in which it intervened, the lowest total since 2004. In contrast, False Claims Act whistleblower cases where the DOJ did not intervene resulted in a record $1.1 billion in recoveries. This was the first time that whistleblower recoveries in government declined cases exceeded the recoveries obtained by the government in intervened cases.

The Polansky case stems from a qui tam suit filed by Jesse Polansky, a former employee of Executive Health Resources, in 2012. Polansky alleged that Executive Health was falsely certifying inpatient hospital admissions as medically necessary, leading to the overbilling of Medicare. The DOJ initially declined to intervene in the case and Polanksy pursued the case without government intervention. In 2019, however, the DOJ moved to dismiss the case.