Supreme Court to clarify Justice Department's power to end whistleblower suits

The U.S. Supreme Court said on June 21 it will review whether a False Claims Act whistleblower's suit alleging that Executive Health Resources defrauded Medicare by falsely designating patient admissions should have proceeded despite the Justice Department's opposition, Bloomberg Law reported June 21.

Jesse Polansky, MD, a former employee of Executive Health Resources, in 2012 alleged that Executive Health violated the False Claims Act by exploiting the difference in reimbursement rates for inpatient and outpatient services, causing hundreds of thousands of claims for medical services to be incorrectly billed to Medicare as inpatient. 

The Justice Department declined to investigate the claims, but the case wound its way through the courts until in August 2019, when the U.S. government asked a federal judge to dismiss the case. 

The U.S. District Court for the Eastern District of Pennsylvania granted the government's motion to dismiss in November 2019, and the 3rd Circuit Court of Appeals backed the dismissal in October 2021.

Dr. Polanksy filed a petition asserting the 3rd Circuit erred by backing the dismissal even though the government didn't intervene in his case before moving to dismiss it. Dr. Polansky also stated in a petition that the government lacks any FCA dismissal authority after initially declining to intervene in a whistleblower's case.

The petition also stated the 3rd Circuit joined the 7th Circuit in treating the government's motion to dismiss as a combined motion to intervene and dismiss. This further cemented a deeply entrenched circuit split over the government's FCA dismissal authority, according to the petition.

Legal experts told Bloomberg the issue over the circuit split is largely academic, but allowing the U.S. government to dismiss a whistleblower case without due process could have wider consequences. 

"It is profoundly disheartening for whistleblowers to have the government undermine years of effort through belated dismissals," Eric Havian, an attorney who represents whistleblowers, told Bloomberg. "Such actions have a broader impact than the case in which the dismissal occurs. It sends a signal to whistleblowers and their attorneys that moving ahead with a declined case is even riskier than previously imagined."

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