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SCOTUS Ruling May Save Labs from Baseless Qui Tam Lawsuits

by | Aug 3, 2023 | News, Open Content

The recent 8-1 decision expands the DOJ’s power to request such cases be thrown out.

A recent US Supreme Court (SCOTUS) ruling could mean that labs will no longer have to worry about being hit with baseless False Claims Act (FCA) qui tam lawsuits. As explained by G2 Intelligence writer and legal expert Glenn Demby, the ruling, U.S. ex rel. Polansky, expands the power of the Department of Justice (DOJ) to request such cases to be thrown out. This power applies even in cases where the DOJ initially chose not to intervene.

The Polansky case involved a doctor who accused his hospital billing company employer of allowing its clients to falsely bill Medicare. Though the DOJ first decided not to intervene, “after five years of discovery, the DOJ decided that enough was enough and asked the court to dismiss the case,” according to Demby’s August 2023 National Lab Reporter article.

The Pennsylvania federal district court agreed to dismiss the case and its ruling was affirmed by the Third Circuit. According to Demby’s article, SCOTUS took on the case to settle the key questions Polansky raises:

  1. Whether the DOJ can ask for a case to be dismissed, even if it initially declined to intervene, and
  2. What standard should be used in deciding whether to grant dismissal.

SCOTUS ruled 8-1 “that the DOJ may seek dismissal of a qui tam suit at any stage in the litigation, even if it declined to intervene in the case during the seal period” and that “courts should follow the normal rules governing voluntary dismissal of lawsuits under Section 41(a) of the Federal Rules of Civil Procedure”—an easy standard to meet.

According to Demby, this means that qui tam cases “without merit or value” are more likely to be dismissed. In their ruling, three of the nine SCOTUS justices also suggested that “the actual qui tam provisions of the FCA might be unconstitutional,” which may further benefit labs and other healthcare providers, Demby writes.

See the full article and insights with a National Lab Reporter subscription or free trial.

For how to brief your CEO on the importance of this ruling, see our August 2023 Lab Compliance Advisor.