Sidley False Claims Act Blog Fifth Circuit Affirms DOJ Broad Authority to Dismiss Qui Tams Over Representatives’ Objections, But Adds Teeth to “Hearing” Requirement
On July 7, 2021, the Fifth Circuit upheld a district court’s grant of the United States’ motion to dismiss – despite the rapporteur’s objection – two qui tams that have called into question pharmaceutical patient support programs. Although the court’s decision is consistent with those of other appellate courts that have upheld DOJ’s broad power to dismiss qui tamDespite the objections of the relators, the Fifth Circuit seems to give teeth to the requirement that the relator must be given a “hearing” before such a dismissal can be granted.
The reporter alleged that the defendants provided patient education services to providers before a prescription was written, in violation of anti-recoil law and certain state laws. The United States refused to intervene. After the rapporteur amended his complaints, the defendants requested dismissal for failure to report. The district court dismissed in part and granted in part. The United States, however, then informed the rapporteur that the United States intended to dismiss the complaints in accordance with government law under 31 USC § 3730 (c) (2) (A), in part to because of the burden that the litigation placed on the government. The trial judge held a consolidated hearing on the government’s dismissal motions, during which the trial judge heard the arguments. The magistrate finally granted the motions, and after the district court adopted the magistrate’s decision, the rapporteur appealed.
The Fifth Circuit recognized that the government may decide to terminate under 31 USC § 3730 (c) (2) (A) once two conditions are met. First, the government must notify the rapporteur of the motion to dismiss; second, the court must offer the rapporteur the possibility of a “hearing”. In assessing how to apply these conditions, the tribunal considered approaches from other circuits. The DC circuit in Fast ruled that the government has almost unlimited discretion to reject qui tams. Likewise, the seventh circuit of UCB (discussed here) concluded that the government has an “absolute” right to revoke, as long as (1) the government serves notice under Rule 41 (a), and (2) there is a “hearing” under § 3730 (c) (2) (A). Conversely, the Ninth Circuit of Orange Sequoia and the tenth circuit in Ridenour adopted a more stringent rational relationship test. To dismiss a parent’s objections, the government must identify (1) a valid government goal and (2) a rational relationship between termination and the achievement of that goal. If the government meets its onus, the onus shifts to the rapporteur to demonstrate that the dismissal is fraudulent, arbitrary and capricious, or illegal.
Not embarking on the alternative circuit approach, the court said that the use of the term ‘hearing’ in the law held “the key to the question of the role of the court in assessing the decision. government to revoke[[H]Earing mean what i[t] said. This includes legal involvement and action. Indeed, dictionary definitions of the word “hearing”
necessarily involves something to be decided. These definitions cast doubt on the government’s notion of a § 3730 (c) (2) (A) hearing as a mere opportunity for the government to publicly disseminate the reasons for his dismissal and for the rapporteur to convince the government to change one’s mind. Such a limited notion of a hearing that leaves nothing for the court to decide or do is inconsistent with the idea that the function of federal courts is to decide actual cases and controversies.
As a result, the circuit court appeared to side with the view that the term “hearing” allows the rapporteur to present evidence, if he wishes. In this regard, the relator argued that the dismissal was inappropriate because the relator had not obtained the hearing of the evidence that due process allegedly required. Even assuming argue that the rapporteur was right about the type of hearing required, the court disagreed. The magistrate had in fact given the rapporteur the possibility of hearing evidence. Refusing to present any evidence, including the testimony of the company principal relating it, because the relator believed he had already won the case, the relator simply chose not to take this opportunity.
Although it went so far as to determine that the hearing opportunity offered met the legal requirement of a hearing, the circuit court refused to go any further and “decide on the precise limits of discretion. government to revoke ”. Instead, the court applied Orange Sequoia to demonstrate that even under the strictest test dismissal was appropriate here. The government proposed two valid objectives to justify the dismissal: (1) the allegations were not sufficiently substantiated to justify the cost of the investigation and prosecution, and (2) further litigation would undermine practices that benefit the programs. health care providers by providing patients with better access to product training. and support. These goals were rationally linked to termination because termination (1) would prevent further litigation costs and (2) remove an obstacle to the provision of beneficial services.
The government having discharged its burden, the burden passed to the rapporteur to show that the dismissal was “fraudulent, arbitrary and capricious, or illegal”. First, the Relator alleged that the government’s desire to fire was based on animosity against the Relator’s parent organization and witness. The court disagreed because this allegation was unsubstantiated. Second, the rapporteur argued that the dismissal was arbitrary and capricious because the government had not carried out a cost-benefit analysis. The court disagreed because the government’s position – that the complaints were unfounded to justify the costs of the litigation – reflected “a kind of cost-benefit analysis”, thus dismissing the opinion as argued. which this argument was not substantiated because the government did not produce a comprehensive cost-benefit analysis.
The decision of the fifth circuit is available here.