In previous blogs, we have discussed the Department of Justice’s (DOJ) active use of its dismissal authority to end qui tam actions brought by relators under the False Claims Act (FCA). That trend continued last week with another court dismissing a qui tam action that the DOJ deemed to be “meritless.”
In United States ex rel. Susan De Sessa v. Dallas County Hospital District, Case 3:17-cv-1782-K, filed July 7, 2017 (N.D.TX.), Dr. Susan De Sessa brought a qui tam action against her former employer (a hospital) in connection with $38 million of federal funds that the hospital received for a project designed to reduce health-care associated infections, known as an 1115 Waiver project. De Sessa, a Clinical Epidemiologist, alleged that the hospital, which already was under a Corporate Integrity Agreement with HHS-OIG, falsified data in connection with reported infection levels in order to receive achievement-based payments of federal funds.
After investigating De Sessa’s allegations, the DOJ moved to dismiss under 31 U.S.C. § 3730(c)(2)(A) asserting that “the infections that Defendant allegedly failed to report were not reportable infections for purposes of the 1115 Waiver Program and would not have impacted the payments to Defendant under the program.” In order to “avoid expending taxpayer resources on a meritless claim,” the DOJ asked the court to dismiss.
On May 23, 2019, the District Court for the Northern District of Texas granted the DOJ’s motion. The court first considered the appropriate standard for its review and found that the Swift standard, which provides the DOJ with unfettered discretion to dismiss (absent fraud on the court), should apply. The court held that even under Sequoia, which requires a valid government purpose for dismissal and a rational relation to accomplishing that purpose, the government had met its burden.
In a last ditch effort, De Sessa requested that the court’s dismissal be without prejudice so that she could strengthen her lawsuit and file in a different jurisdiction. The court refused because doing so “defeats the purpose of affording the Government broad discretion under § 3730(c)(2)(A) to exercise ‘its historical prerogative to decide which cases should go forward in the name of the United States.’”
The De Sessa case highlights the value for defendants when the DOJ exercises its dismissal authority. De Sessa had filed a detailed complaint asserting troubling allegations based on her first-hand knowledge while working for the defendant. The DOJ’s basis for dismissal stemmed from its review of the specific infections at issue in the case and its knowledge of the immateriality of those infections to the agency’s funding decision. It is unlikely that the defendant could have made similar arguments for dismissal until it proceeded with costly discovery into relator’s allegations, as well as the agency’s decision-making process with regard to the 1115 Waiver project. By exercising its authority to dismiss, the DOJ saves taxpayer expenses and agency resources. And as a beneficial byproduct for defendants, it saves significant legal expenses that would have been incurred defending a case that the DOJ already found to be lacking merit.
Derek Adams, a former Trial Attorney with the Department of Justice, Civil Fraud Section, is a partner in the firm’s False Claims Act, FIRREA, and Litigation practice groups. Derek has extensive experience with False Claims Act matters, and can be reached at email@example.com or (202) 466-8960 if you have any questions or need help with FCA compliance, investigations, or litigation.