Health Law Daily Feds have unfettered right to dismiss qui tam action filed in its name
Wednesday, May 13, 2020

Feds have unfettered right to dismiss qui tam action filed in its name

By Jeffrey H. Brochin, J.D.

Congress has allowed the U.S. to seek dismissal notwithstanding the relator’s objections as long as the relator has received notice and a hearing.

A federal district court in Mississippi has denied the motion of a relator to conduct discovery and has instructed him to file a response to the United States’ motion to dismiss the False Claims Act (FCA) claim that the relator premised on the Emergency Medical Treatment and Labor Act (EMTALA), 42 U.S.C. § 1395dd. The government had declined to intervene, and the relator pursued the qui tam action in the name of the government; however, the government moved to dismiss the action, and the court directed him to respond to that motion before entertaining expansive discovery (U.S. ex rel. Vanderlan v. Jackson HMA, LLC, May 11, 2020, Jordan, D.).

‘Anti-dumping’ statute. EMTALA is often referred to as "the ‘anti-dumping’ statute," and its 1986 passage reflected Congress’s growing concern that hospitals were dumping patients who could not pay by refusing to admit them to the emergency room, or by prematurely transferring them to other hospitals before their emergency conditions stabilized. The relator claimed that his former employer violated the statute by transferring uninsured African-American trauma patients to another hospital.

After considerable delay, the United States declined to intervene, and the relator pursued this qui tam action as the relator in the name of the government to enforce the United States’ rights under EMTALA and the FCA. The government offered three reasons for ending the FCA claims: (1) the relator’s FCA suit has hindered OIG’s efforts to settle the administrative claims with Jackson HMA; (2) continued litigation would impose unnecessary costs and burdens; and (3) the FCA claims lack merit. Rather than respond to the government’s motion to dismiss, the relator argued that he had the right to proceed with discovery, which for the reasons cited below, the court denied.

Government’s right to dismiss. The court first discussed the threshold issue of: "under what circumstances may the United States dismiss a qui tam action?" The FCA allows a private party to bring a qui tam action on behalf of the United States, but even if the government declines to intervene, they nevertheless retain substantial control over the action. The court cited the relevant portion of the FCA which reads as follows: "The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion."

Split interpretations among the circuits. The court further noted that the standard for granting dismissal under the FCA has produced a circuit split, and that the Fifth Circuit has not yet "directly addressed" which standard is correct. On the one hand, the D.C. Circuit construed the FCA as giving the government an unfettered right to dismiss an action (Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003). But the Ninth Circuit has adopted a two-part rational relation burden-shifting test, (U.S., ex rel., Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998), pursuant to which, before a court may grant dismissal notwithstanding the relator’s objections, the United States must demonstrate that dismissal is rationally related to a "valid government purpose," and once the government does so, the burden then shifts to the relator to demonstrate that dismissal is fraudulent, arbitrary and capricious, or illegal.

Unfettered right to dismiss. The court followed the holding in Swift, and ruled that the government has an unfettered right to dismiss a qui tam FCA action brought on its behalf, as long as the relator receives notice and hearing. The Swift ruling was deemed to be in keeping with Congressional intent, due to the fact that although the original Senate bill stated that objections "shall be permitted," Congress dropped that language before final passage and replaced it with "the Government may dismiss the action notwithstanding the [relator’s] objections" if the relator receives notice and a hearing. Accordingly, the relator was ordered to respond to the government’s motion to dismiss prior to the lifting of any stay of the proceedings.

EMTALA unrecognized as FCA basis. The court acknowledged that litigation costs represent a valid governmental interest, even if the government concedes that a case has merit. However, the government made no such concession in the instant case, arguing instead that the FCA claims were meritless. While the court found it unnecessary to fully evaluate whether the EMTALA-based FCA claims fail as a matter of law, the United States made at least a superficial case that they do, because turning patients away did not result in any false claims or obligations.

Although the court made no ruling on the merits, and referenced the EMTALA-based FCA claim argument merely to show that the government had evaluated the FCA claims from a legal standpoint, the court cited the fact that it was undisputed that no court has ever recognized the FCA claim that the relator was pursuing, there being no prior FCA case premised on alleged EMTALA violations. The government would therefore be justified in concluding that success was at best questionable and the "end was nowhere in sight."

As such, the court denied the relator’s motion to conduct discovery and instructed him to file a response to the United States’ motion to dismiss.

The case is No. 3:15-cv-00767-DPJ-FKB.

Attorneys: C. Victor Welsh, III (Pittman, Roberts & Welsh, PLLC) for W. Blake Vanderlan. J. William Manuel (Bradley Arant Boult Cummings, LLP) for Jackson HMA LLC d/b/a Central Mississippi Medical Center d/b/a Merit Health Central-Jackson.

Companies: Jackson HMA LLC d/b/a Central Mississippi Medical Center d/b/a Merit Health Central-Jackson

MainStory: TopStory CaseDecisions CMSNews EMTALANews FraudNews ProgramIntegrityNews QuiTamNews MississippiNews

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