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From Health Law Daily, March 26, 2019

U.S. has unfettered right to dismiss FCA suits even when choosing not to intervene

By Robert B. Barnett Jr., J.D.

A Louisiana federal court has ruled that the federal government has an unfettered right to dismiss a qui tam suit filed under the False Claims Act, even when the U.S. has declined to intervene and the relator opposes the dismissal.

The federal government has an unfettered right to dismiss a False Claims Act whistleblower suit, even when the U.S. has not intervened and the whistleblower objects, a Mississippi federal court has ruled. In dismissing four of the whistleblower’s five counts, the court, sitting in the Fifth Circuit where the issue is has not been decided, opted for the D.C. Circuit’s rule that the government has an unfettered right rather than the Ninth Circuit’s rule that the government must put forward a reason that bears a rational relation to a valid government purpose. The Mississippi court went on to say that, even if it had adopted the Ninth Circuit rule, the U.S. met that standard in this case and the four counts would have been dismissed anyway (U.S. ex rel. Sibley v. Delta Regional Medical Center, March 21, 2019, Davidson, G.).

Background. An employee in Delta Regional Medical Center’s emergency department came to believe that Delta Regional was intentionally failing to provide appropriate emergency care to individuals who came into Delta Regional’s emergency room, in violation of the Emergency Medical Treatment and Labor Act (EMTALA), which requires that a patient undergoing a medical emergency be treated until the emergency condition is stabilized (42 U.S.C. §1395dd(b)(1)(A)). She employed an outside physician, who confirmed after reviewing the records that several potential EMTALA violations had occurred. She then filed a qui tam action against Delta Regional in Mississippi federal court under the False Claims Act, based on 52 violations of the EMTALA. Only one of the five counts in her complaint was not based on the EMTALA/FCA violations. The U.S. elected not to intervene. Delta Regional filed a motion to dismiss, at which point so did the U.S. government.

Dismissal standard. In a False Claims Act suit, the court said, the government rather than the relator is the injured party. The powers given to the government under the False Claims Act include the right to dismiss the case, even if the relator objects. All that the Act says further about the dismissal is that the relator must have an opportunity for a hearing on the motion to dismiss. The Act’s silence on any further guidance raises the question: What does the government have to show, if anything, to obtain the dismissal? Apparently, only two circuits have addressed the question, reaching diametrically opposing decisions. In Compare Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003), the D.C. Circuit ruled that the government has an unfettered right to dismiss any qui tam case. The requirement that there be a hearing is only for the purpose of giving the relator/whistleblower one last chance to convince the government not to dismiss the case. In U.S. ex rel., Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998), however, the Ninth Circuit ruled that the government can dismiss a case only if it puts forward some reason that bears a rational relation to a valid government purpose.

The Mississippi federal court selected the DC Circuit’s rationale. In reaching its decision, the court looked for guidance to opinions from the Fifth Circuit, where this court sits. Although the Fifth Circuit has not ruled directly on this point, it has said that the government has the unfettered right to stop any settlement between a relator and a defendant (Searcy v. Philips Electronics N. Am. Corp., 117 F.3d 154, 155 (5th Cir. 1997)). In those decisions, this court said, the Fifth Circuit has discussed the government’s right in related matters as something akin to an unfettered right. Furthermore, the Mississippi court said, giving the government the unilateral right to dismiss these actions is "consistent with the notions of prosecutorial and executive discretion."

Dismissal under the 9th Circuit standard. The court went on to add that the four EMTALA/FCA claims would have been dismissed, even under the Ninth Circuit standard. According to the court, the standard has two parts: (1) the government identifies a valid government purpose and (2) then, the burden shifts to the relator to prove that the dismissal is fraudulent, arbitrary, or capricious. In this case, the court said, the government offered two valid reasons for the dismissal. The first reason was that the suit threatens HHS’s enforcement efforts under the EMTALA. As evidence, it cited a pending case in which the defendant hospital was reluctant to settle with the government while the relator’s suit was still pending. The second reason was that dismissal would conserve government resources. Even though an argument could be made that the government could conserve resources simply by not intervening, the court said that the government’s costs in monitoring the suit would high enough to justify a dismissal. As this point, the burden shifted to the relator to establish that the government’s reasons were arbitrator. The relator failed that burden, the court said.

Motion to dismiss. As if the first two reasons were not enough, the court went on to say that the four counts in the complaint that involved EMTALA/FCA claims would have been dismissed in any event because they failed to state valid claims. They failed, the court said, because they failed to satisfy Fed. R. Civ. P. 9(b)’s requirements for pleading fraud with specificity. The relator never alleged any particulars of any scheme to submit false claims. In fact, the relator never really tied the EMTALA violations to any specific claims allegedly falsely submitted. Furthermore, assertions that Delta Regional failed to certify transfer conditions before transferring patients were not relevant to any role the government had because those certifications are not presented to the government.

The court, therefore, granted the federal government’s motion to dismiss all four counts of the complaint that dealt with EMTALA/FCA violations.

The case is No. 4:17-cv-000053-GHD-RP.

Attorneys: Feleica L. Wilson, U.S. Attorney's Office, for the United States. Lance L. Stevens (Stevens & Ward) and C. Victor Welsh, III (Pittman Germany Roberts & Welsh, L.L.P.) for Candi Sibley. Frank W. Trapp (Phelps Dunbar LLP) for Delta Regional Medical Center.

Companies: Delta Regional Medical Center

MainStory: TopStory CaseDecisions CMSNews AuditNews BillingNews EMTALANews FCANews MississippiNews

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