v.
Executive Health Resources Inc
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 19-3810
__________
JESSE POLANSKY, M.D., M.P.H.;
THE STATE OF CALIFORNIA, THE STATE OF COLO-
RADO, THE STATE OF CONNECTICUT, THE STATE OF
DELAWARE, THE DISTRICT OF COLUMBIA, THE
STATE OF FLORIDA,THE STATE OF GEORGIA, THE
STATE OF HAWAII, THE STATE OF ILLINOIS, THE
STATE OF INDIANA, THE STATE OF IOWA, THE
STATE OF LOUISIANA,THE STATE OF MARYLAND,
THE COMMONWEALTH OF MASSACHUSETTS, THE
STATE OF MICHIGAN, THE STATE OF MINNESOTA,
THE STATE OF MONTANA, THE STATE OF NE-
VADA,THE STATE OF NEW JERSEY, THE STATE OF
NEW MEXICO, THE STATE OF NEW YORK, THE
STATE OF NORTH CAROLINA, THE STATE OF OKLA-
HOMA, THE STATE OF RHODE ISLAND, THE STATE
OF TENNESSEE,THE STATE OF TEXAS, THE COM-
MONWEALTH OF VIRGINIA, THE STATE OF WASH-
INGTON, and THE STATE OF WISCONSIN
v.
EXECUTIVE HEALTH RESOURCES INC;
UNITEDHEALTH GROUP INC;
UNITED HEALTHCARE SERVICES INC; OPTUM INC;
OPTUMINSIGHT INC;
OPTUMINSIGHT HOLDINGS LLC;
COMMUNITY HOSPITAL OF THE
MONTEREY PENINSULA;
YALE NEW HAVEN HOSPITAL
UNITED STATES OF AMERICA
Jesse Polansky, M.D., M.P.H.,
Appellant.
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-12-cv-04239)
Honorable Michael M. Baylson, U.S. District Judge
__________
Argued November 18, 2020
Before: JORDAN, KRAUSE, and RESTREPO, Circuit
Judges
(Filed: October 28, 2021)
Nicholas C. Carullo
Stephen L. Shackelford, Jr.
Susman Godfrey
1301 Avenue of the Americas – 32nd Fl.
New York, NY 10019
Daniel L. Geyser [ARGUED]
Haynes & Boone
2323 Victory Avenue – Ste. 700
Dallas, TX 75219
William T. Jacks
Fish & Richardson
111 Congress Avenue – Ste. 810
Austin, TX 78701
Counsel for Appellant
Tejinder Singh
Goldstein & Russell
7475 Wisconsin Avenue – Ste. 850
2
Bethesda, MD 20814
Counsel for Amicus Appellant
Taxpayers Against Fraud Education Fund
Ned I. Miltenberg
National Legal Scholars Law Firm
5410 Mohican Road – Ste. 200
Bethesda, MD 20816
Counsel for Amicus Appellants Erwin Chemerinsky,
National Whistleblowers Center, and
Project on Government Oversight
Ethan M. Posner [ARGUED]
Christopher M. Denig
Matthew F. Dunn
Michael M. Maya
Krysten R. Moller
Covington & Burling
850 10th Street, NW
One City Center
Washington, DC 20001
Abigail A. Hazlett
Tracy Rhodes
Robin P. Sumner
Troutman Pepper Hamilton Sanders
3000 Two Logan Square – Ste. 1250
18th and Arch Streets
Philadelphia, PA 19103
Counsel for Appellee Executive Health Resources Inc.
Jeffrey B. Clark [ARGUED]
United States Department of Justice
Environment & Natural Resources Division
950 Pennsylvania Avenue, NW
Washington, DC 20530
Stephanie R. Marcus
United States Department of Justice
3
Civil Division
950 Pennsylvania Avenue, NW – Rm. 7642
Washington, DC 20530
Charles W. Scarborough
United States Department of Justice
Appellate Section
950 Pennsylvania Avenue, NW – Rm. 7244
Washington, DC 20530
Counsel for Appellee United States of America
Jeffrey S. Bucholtz
Jeremy M. Bylund
King & Spalding
1700 Pennsylvania Avenue, NW – Ste. 200
Washington, DC 20006
Counsel for Amicus Appellee
Chamber of Commerce of the United States of America
__________
OPINION OF THE COURT
__________
KRAUSE, Circuit Judge.
The False Claims Act (FCA), 31 U.S.C. § 3729, et seq., empowers not just the federal government, but also private in- dividuals, to bring claims for fraud on the United States and to do so in the Government’s name in exchange for a share of the proceeds. These individuals, known as relators, are generally on the same side as the Government, which has the option early on to either intervene or allow the relator to move forward with the action on her own. But what authority does the Govern- ment have when it declined to intervene at the outset and sub- sequently opposes the relator’s suit?
To answer, we must resolve two key questions that have divided our sister circuits: (1) whether the Government in that situation can move for dismissal without first intervening, and (2) if the Government properly moves for dismissal, what, if any, standard must it meet for its motion to be granted? For the reasons that follow, we conclude that the Government is required to intervene before moving to dismiss and that its mo- tion must meet the standard of Federal Rule of Civil Procedure 41(a). Because we also conclude that the District Court here acted within its discretion in granting such a motion by the Government, we will affirm the Court’s order of dismissal.
[*379]I. BACKGROUND
A. Factual Background
The False Claims Act has its roots in the Civil War, when “a series of sensational congressional investigations” un- covered widespread fraud by wartime contractors that had bilked the federal government by charging for “nonexistent or worthless goods.” United States v. McNinch, 356 U.S. 595, 599 (1958). In response, Congress not only prohibited the making of false claims to the Government, 31 U.S.C. § 3729(a)(1), and empowered the United States to seek civil remedies, id. § 3730(a); it also legislated a private enforcement mechanism, not unlike the bounty hunting common in the rough-and-tumble world of the mid-nineteenth century. That is, the statute permits private individuals, acting in the name of the Government, to assert FCA claims “for the person and for the United States Government.” Id. § 3730(b)(1). These rela- tor-initiated lawsuits, known as qui tam actions, effectively deputize citizens to act as private attorneys general, compen- sated with a share of the money recovered.[1] See id. § 3730(d).
[*380]This case involves such a qui tam action. Relator-Ap- pellant Dr. Jesse Polansky was an official at the Centers for Medicare and Medicaid Services (CMS) before consulting for Defendant-Appellee EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians that bill Medicare.[2] While employed as a con- sultant, Polansky became concerned that EHR was systemati- cally enabling its client hospitals to over-admit patients by cer- tifying inpatient services that should have been provided on an outpatient basis. As alleged in the complaint he eventually filed in the District Court, EHR was causing hospitals to bill the Government for inpatient stays that were not “reasonable and necessary” for diagnosis or treatment—a statutory require- ment for reimbursement under the Government’s Medicare program, 42 U.S.C. § 1395y(a)(1)(A), as explicated by CMS initially in guidance, and as of 2013, in a formal regulation, see 42 C.F.R. § 412.3(d)(1). From at least 2006 until the filing of his amended complaint in 2019, he alleged, EHR’s certifica- tions were false and caused the submission of false claims to the Government.
B. Procedural History
In 2012, on the basis of those allegations, Polansky filed this FCA action. His complaint remained in camera and under seal for the next two years while the Government conducted its own investigation and ultimately determined it would not par- ticipate in the case. Under the FCA, “[i]f the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action.” 31 U.S.C. § 3730(c)(3). So at that point, the complaint was unsealed and Polansky, “for [himself] and for the United States Govern- ment,” continued as plaintiff. Id. § 3730(b)(1).
[*381]Over the next several years, the parties and the District Court invested considerable time and resources in the case. Once EHR’s motion to dismiss was denied,3 the District Court divided the case into two segments for case-management pur- poses: “Phase I” claims, covering EHR’s certifications from 2009 to October 1, 2013, and “Phase II” claims, covering its certifications after October 1, 2013, the date that CMS’s formal regulation went into effect. Because the complaint implicated hundreds of thousands of allegedly false claims, the District Court also decided to select a small number for a bellwether trial where “the jury would answer interrogatories,” and the Court would then “enter judgment on all other claims encom- passed by the jury verdict.” Polansky v. Exec. Health Res., Inc., 422 F. Supp. 3d 916, 919 (E.D. Pa. 2019). In anticipation of that trial, the Court designed a procedure for selecting the bellwether claims and appointed a special master, and the par- ties commenced discovery, focused on Phase I claims.
In February 2019, however, the case took an unexpected turn: The Government notified the parties that it intended to dismiss the entire action pursuant to 31 U.S.C. § 3730(c). Un- der paragraph (c)(1) of that section, a relator’s ability to con- tinue a suit he initiated is limited in various ways “[i]f the Gov- ernment proceeds with the action.” Those limits are spelled in out in paragraph (c)(2), including that “[t]he Government may dismiss the action notwithstanding the objections of the [rela- tor]” so long as the relator receives notice and an opportunity to be heard on the Government’s motion. 31 U.S.C. § 3730(c)(2)(A). Here, although the Government had origi- nally opted not to proceed with the action and had not formally intervened, it pointed to § 3730(c)(2)(A) as the source of its authority to dismiss the case over Polansky’s objection.
[*382]The Court stayed the proceedings while the parties ne- gotiated with the Government. Initially, the Government ac- ceded to Polansky’s request not to dismiss his case in exchange for his filing of an amended complaint that substantially nar- rowed the scope of his Phase I claims. But the Government also reserved the right to reconsider, and a few months later, in August 2019, it invoked that right, and filed a motion to dis- miss pursuant to § 3730(c)(2)(A). The District Court accepted that filing and, following briefing and argument, granted the Government’s motion.[4] It recognized the circuit split on the issue of what standard applies to a § 3730(c)(2)(A) dismissal, but because it concluded that the Government had made an ad- equate showing under any of the prevailing standards, it de- clined to weigh in. That task now falls to us.
II. JURISDICTION AND STANDARD OF REVIEW
The District Court had jurisdiction pursuant to 31 U.S.C. § 3732(a) and 28 U.S.C. § 1331, and we have jurisdic- tion pursuant to 28 U.S.C. § 1291. We exercise plenary review over a district court’s interpretation of a federal statute. See United States v. Hodge, 948 F.3d 160, 162 (3d Cir. 2020) (ci- tation omitted).
[*383]III. DISCUSSION
Polansky challenges the District Court’s dismissal on the ground that the Government lacked statutory authority to move to dismiss in the first place. He also contends that, if the Government did have that authority, its motion should have been denied on the merits under the applicable standard.
We address these arguments in three parts. We con- sider, first, whether the FCA requires the Government to inter- vene in order to seek dismissal pursuant to § 3730(c)(2)(A)— either at the first opportunity, 31 U.S.C. §3730(c)(1), or “at a later date upon a showing of good cause,” id. § 3730(c)(3). We next address the standard governing such motions. And fi- nally, we discuss the consequences of these holdings for the District Court’s order of dismissal in this case.[5] A. The Government’s Authority to Seek Dismis- sal under the FCA
[*384]We begin with the first of the questions in this area that have divided the Courts of Appeals: whether, and in what cir- cumstances, the Government retains statutory authority to move to dismiss an FCA action, pursuant to 31 U.S.C. § 3730(c)(2)(A), if it opted not to proceed at the outset6 and allowed the relator to move forward “for the [relator] and for the United States Government.”7 31 U.S.C. § 3730(b)(1). The
Eristoff, 669 F.3d 374, 382 n.2 (3d Cir. 2012) (quoting Univer- sal City Studios, Inc. v. Corley, 273 F.3d 429, 445 (2d Cir. 2001)).
[*385]answer turns on the interrelationship among the subsections of § 3730(c). So we begin with the text and structure of the stat- ute, and then consider the relevant canons of statutory con- struction.
Section 3730(c) sets forth the rights and relationship of the Government and relator through the life of an FCA action. Because our analysis turns on the language and structure of the statute, we excerpt its relevant provisions below:
(1) If the Government proceeds with the action . . . [the relator] shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (2).
(2)(A) The Government may dismiss the action not- withstanding the objections of the [relator] if the [rela- tor] has . . . [notice and] an opportunity for a hearing[.]
(B) The Government may settle the action with the de- fendant notwithstanding the objections of the [relator] if the court determines . . . the proposed settlement is fair, adequate, and reasonable . . . .
(C) Upon a showing by the Government that [the rela- tor’s] unrestricted participation . . . would interfere with or unduly delay the Government’s prosecution of the case . . . the court may, in its discretion, impose limita- tions on the [relator’s] participation . . . .
Whether the FCA permits the Government to dismiss a rela- tor’s action that it previously declined is a pure question of stat- utory interpretation; the district courts would benefit from guidance on a question that has divided the Courts of Appeals, see infra n.8; and resolving this question is logically antecedent to the question before us: the standard that applies when the Government seeks dismissal. We therefore exercise our dis- cretion to excuse Polansky’s forfeiture.
[*386](D) Upon a showing by the defendant that [the rela- tor’s] unrestricted participation . . . would cause the de- fendant undue burden or unnecessary expense, the court may limit the [relator’s] participation . . . .
(3) If the Government elects not to proceed with the action, the [relator] shall have the right to conduct the action. . . . When [the relator] proceeds with the action, the court, without limiting the status and rights of the [relator], may nevertheless permit the Government to intervene at a later date upon a showing of good cause.
(4) Whether or not the Government proceeds with the action, [it may seek a stay of the relator’s discovery that] would interfere with [a Government investigation] . . . .
The scope of the Government’s dismissal authority in this context has engendered significant debate. The parties’ positions track a split among our sister circuits.[8] The Government and EHR (collectively, “Appellees”) ask us to fol- low the D.C., Ninth, and Tenth Circuits in reading this provi- sion as a standalone grant of dismissal authority that empowers the Government to move for dismissal of the relator’s action at any point in the litigation and regardless of whether it has in- tervened.[9] Polansky, on the other hand, presses the view of the Sixth and Seventh Circuits that Congress authorized the Gov- ernment to move for dismissal under § 3730(c)(2)(A) only when it “proceeds with the action.” 31 U.S.C. § 3730(c)(1). Polansky would also have us go further, to hold that the Gov- ernment has that authority only if it intervenes at the outset and, having declined to do so, it is powerless to seek dismissal even if it subsequently intervenes.
[*387]“[B]ear[ing] in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme,” Mejia-Castanon v. Att’y Gen., 931 F.3d 224, 233-34 (3d Cir. 2019) (quoting King v. Burwell, 576 U.S. 473, 492 (2015)), we conclude Congress intended the reading adopted by the Sixth and Seventh Circuits, i.e., under § 3730(c), the Government must intervene before it can move to dismiss, but it can seek leave to intervene at any point in the litigation upon a showing of good cause. Considered in context, § 3730(c)(2) is not, as Appellees would have it, a standalone provision that grants the Government unconditional authority to seek dismis- sal as a non-party. That authority is granted as a “limitation[]” of the relator’s rights in the first paragraph “if”—and only if— “the Government proceeds with the action.” 31 U.S.C. § 3730(c)(1). “If the Government elects not to proceed with the action,” on the other hand, then the relator “shall have the right to conduct the action,” unencumbered by the “limita- tions” in subparagraph (c)(2)(A) through (c)(2)(D) on that right that paragraph (c)(2) would otherwise impose. Id. § 3730(c)(3).
[*388]To this, Appellees object that those limitations are not nestled under paragraph (c)(1), as one might expect if they were contingent on “the Government proceed[ing] with the ac- tion.” Id. § 3730(c)(1). Rather, they are set forth in paragraph (c)(2), a separately numbered paragraph, on par with and not structurally subordinate to paragraph (c)(1).10 But Appellees’ argument is belied by the context of the “surrounding words and provisions” of statutory language. G.L. v. Ligonier Valley Sch. Dist. Auth., 802 F.3d 601, 617 (3d Cir. 2015) (citation omitted). Here, the “surrounding . . . provisions” are the other subparagraphs in § 3730(c)(2) that only make sense if the Gov- ernment is a party in the case. Subparagraph (c)(2)(C), for ex- ample, enables the Government to limit a relator’s ability to call and examine witnesses where it “would interfere with or unduly delay the Government’s prosecution of the case,” 31 U.S.C. § 3730(c)(2)(C), a provision that by its terms identifies the Government as a party. Subparagraph (D) grants FCA de- fendants a similar power to limit the relator’s participation in the litigation “[u]pon a showing . . . that [such] participa- tion . . . would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense,” id. § 3730(c)(2)(D). But this provision, too, assumes the Govern- ment is prosecuting the case because “[o]bviously a defendant cannot ‘restrict the participation’ of its sole adversary in a law- suit.” United States ex rel. CIMZNHCA, LLC v. UCB, Inc., 970 F.3d 835, 845 (7th Cir. 2020).
[*389]That § 3730(c)(2)(A) is conditioned on the Government proceeding under paragraph (c)(1) is also apparent from an- other canon of statutory construction: We must “[a]ssum[e] that every word in a statute has meaning” and “avoid interpret- ing part of a statute so as to render another part superfluous.” Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364, 367 (3d Cir. 2011). Yet, if we were we to conclude, as the D.C., Ninth, and Tenth Circuits do, that the Government can move to dismiss a relator’s case whether or not it “proceeds with the action,” 31 U.S.C § 3730(c)(1), it would render at least two provisions superfluous: The qualifier in paragraph (c)(1) that a relator’s rights are “subject to the limitations set forth in para- graph (2)” when the Government “proceeds with the action,” id., would be unnecessary because relators would always be subject to those limitations, regardless of whether the Govern- ment “proceeds,” id.; and paragraph (c)(4)’s description of ac- tions the Government may take “[w]hether or not [it] proceeds with the action” would be surplusage if every provision of par- agraph (2) applied “whether or not” the Government inter- vened. Id. § 3730(c)(4).
[*390]Though we reject Appellee’s interpretation as failing to read the paragraphs of § 3730(c) as “a symmetrical and coher- ent regulatory scheme . . . [and] an harmonious whole,” Si Min Cen v. Att’y Gen., 825 F.3d 177, 192 (3d Cir. 2016) (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (internal quotations omitted)), neither can we ac- cept Polansky’s reading that the Government may seek dismis- sal only if it intervened at the first opportunity. Polansky grounds that reading in the Supreme Court’s description of the relator’s “right to conduct the action” if “the Government elects not to proceed with it,” id. § 3730(c)(3), as “exclusive,” Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 769 (2000)), combined with paragraph (c)(3)’s qual- ification that, if the Government seeks leave to intervene once the suit is already underway, it must do so “without limiting the status and rights of the [relator].” 31 U.S.C. § 3730(c)(3). Because involuntary dismissal would “limit[]” the relator’s “exclusive” right to conduct the action, Polansky contends, the Government intervenes pursuant to § 3730(c)(3) without the authority it originally had to seek dismissal under § 3730(c)(2)(A).
Both of Polansky’s premises are flawed. First, nothing in Stevens compels such a reading. The Court used “exclusive” to mean that only the relator, as opposed to any other private individual, could proceed with an FCA action after the Gov- ernment declines it, which the statute explicitly states in an- other section.[11] See 31 U.S.C. § 3730(b)(5); Stevens, 529 U.S.
[*391]at 769. It nowhere suggests that the relator’s right to control the action is exclusive vis-a-vis the Government. Second, had Congress intended so draconian a consequence as to strip the Government of all ability to terminate a case brought in its name, it would not have obscured it in a clause preserving the “status and rights of the [relator].” 31 U.S.C. § 3730(c)(3). Congress “does not alter the fundamental details of a regula- tory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001).
Indeed, if anything the language of paragraph (c)(3) cuts the other way, for the statutory rights that the relator retains upon the Government’s intervention can be no more or less than those originally vested by the FCA: “the right to continue as a party to the action, subject to the limitations set forth in paragraph (2),” 31 U.S.C. § 3730(c)(1), i.e., subject to the Gov- ernment’s ability to seek dismissal pursuant to paragraph (c)(2)(A). In other words, we read § 3730(c) as a whole, as do the Sixth and Seventh Circuits, to mean that: “[I]f the Govern- ment elects not to proceed,” the relator conducts the action; the Government may “intervene at a later date upon a showing of good cause;” and the relator then retains the same status and rights as if the Government originally intervened. Id. § 3730(c)(3). Those rights include the right to continue as a party, but “subject to the limitations set forth in paragraph (2).” Id. § 3730(c)(1). And under paragraph (c)(2) the Government may seek involuntary dismissal against the relator, but the re- lator must be provided notice and an opportunity to be heard. Id. § 3730(c)(2)(A).
In opposition to that reading, Appellees invoke one last canon of construction: constitutional avoidance. They argue that interpreting the statute to make intervention a prerequisite to moving to dismiss would compromise the Government’s ability to control litigation brought in its name and thereby “place the FCA on constitutionally unsteady ground.” Ri- denour v. Kaiser-Hill Co., 397 F.3d 925, 934 (10th Cir. 2005). Specifically, they contend, it risks violating the separation of powers embodied in the Take Care Clause, which entrusts the Executive Branch with the duty to “take Care that the Laws be faithfully executed.” U.S. Const., art. II, § 3; see Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2205 (2020) (recognizing that, although there is no “separation of powers clause,” “[this] foundational doctrine[] [is] instead evident from the Constitu- tion’s vesting of certain powers in certain bodies,” among them “Article II’s vesting of the ‘executive Power’ in the Presi- dent”). As a result, they urge that we eschew any requirement of intervention to avoid “grave doubts” to the statute’s consti- tutionality. United States v. Palomar-Santiago, 141 S. Ct. 1615, 1622 (2021).
[*392]We recognize that the Tenth Circuit found this argu- ment persuasive, see Ridenour, 397 F.3d at 934-35, but we do not see genuine constitutional doubts to avoid. As the Seventh Circuit also concluded, showing “good cause” is neither a bur- densome nor unfamiliar obligation. See CIMZNHCA, 970 F.3d at 848-49. It is a “uniquely flexible and capacious concept,” meaning simply a “legally sufficient reason,” id. at 846 (quot- ing Good Cause, s.v. Cause, Black’s Law Dictionary 101 (4th pocket ed. 2011)), and it is a standard the Government rou- tinely satisfies to extend its time to investigate the relator’s case under § 3730(b)(3). See 31 U.S.C. § 3730(b)(3) (allowing Government to extend the time it has to decide whether to pro- ceed with the action upon “good cause shown”); see also CIM- ZNHCA, 970 F.3d at 848 (observing that even in actual crimi- nal cases, “the government must have ‘leave of court’ to dis- miss the prosecution” once it is underway). And, of course, as the Seventh Circuit also noted, “avoiding offense to the sepa- ration of powers in a case that actually risks it would itself weigh heavily in any ‘good cause’ determination,” id. at 847, providing an adequate forum to vindicate the prerogatives of the Executive Branch.[12] In sum, while we respect the contrary view of some our sister Circuits, we agree with the Seventh Circuit that the text and structure of § 3730(c), as well as settled canons of statutory interpretation, require the Government to intervene pursuant to paragraph (c)(3), before it can exercise its authority to seek dis- missal pursuant to paragraph (c)(2)(A). Once it has intervened as a party, the Government is then “proceed[ing] with the ac- tion” under paragraph (c)(1); the rights of the relator are “limit[ed]” accordingly under paragraph (c)(2); and the Gov- ernment can seek an involuntary dismissal of the relator’s ac- tion.
[*393]B. The Applicable Standard
We next consider the standard applicable to the Govern- ment’s motion. Is the Government automatically entitled to dismissal, or does that decision lie in the District Court’s dis- cretion? Or in practical terms, is the “opportunity for a hearing on the motion” in § 3730(c)(2)(A) merely a forum for the rela- tor to attempt to “convince the [G]overnment not to end the
in both England and at the time of the founding); Marvin v. Trout, 199 U.S. 212, 225 (1905) (noting that qui tam statutes were “in existence for hundreds of years in England, and in this country ever since the foundation of our government”); Adams v. Woods, 6 U.S. (2 Cranch) 336, 341 (1805) (Marshall, C.J.) (“Almost every fine or forfeiture under a penal statute, may be recovered by an action of debt [qui tam].”); 3 William Black- stone, Commentaries[*160] (relating that forfeitures created by penal statutes “more usually . . . are given at large, to any com- mon informer; or . . . to the people in general . . . . [I]f any one hath begun a qui tam, or popular, action, no other person can pursue it; and the verdict passed upon the defendant . . . is . . . conclusive even to the king himself.”). These deep historical roots suggest that, even if the “good cause” standard reduces the Government’s degree of control over a relator’s suit, such a lack of direct control was not considered an unconstitutional flaw at the founding.
[*394]case,” as the Government argues, Gov’t Br. 28, or is it an ad- versarial hearing to inform the District Court’s ruling on the Government’s motion?
This issue, too, has divided the Courts of Appeals, see Chang v. Children’s Advocacy Center of Delaware, 938 F.3d 384, 387 (3d Cir. 2019), which have taken three paths.[13] While the D.C. Circuit agrees with the Government that it has an “un- fettered right” to dismiss, see Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003), and the Ninth and Tenth Circuits hold it to a “rational relation” standard drawn from substantive due process jurisprudence, see United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145-46 (9th Cir. 1998); Ridenour, 397 F.3d at 936, the Sev- enth Circuit simply applies the Federal Rules of Civil Proce- dure as it would to any party, see CIMZNHCA, 970 F.3d at 849- 50. Today we wade into the fray, again siding with the Seventh Circuit.
Below, we discuss the standard we adopt, and then ex- plain why we decline to follow the competing views offered by our sister Circuits.
[*395]1. The Standard We Adopt
The standard applicable to the Government’s motion to dismiss follows logically from the FCA’s request that the Gov- ernment intervene before seeking dismissal. Having inter- vened, the Government becomes a party, and like any party, it is subject to the Federal Rules of Civil Procedure, including the rule governing Voluntary Dismissal.
That is Rule 41(a), which establishes different standards for a motion to dismiss depending on the procedural posture of the case. If the motion is filed before the defendant files an answer or summary judgment motion, “the plaintiff may dis- miss an action without a court order” simply by filling a “notice of dismissal.” Fed. R. Civ. P. 41(a)(1)(A). The effect of that notice is “automatic and immediate,” such that “no order of the district court is needed to end the action,” In re Bath & Kitchen Fixtures Antitrust Litig., 535 F.3d 161, 165 (3d Cir. 2008). But once the action has passed the “point of no return,” id. (quoting Manze v. State Farm Ins. Co., 817 F.2d 1062, 1065 (3d Cir. 1987)), with the filing of the defendant’s responsive pleading, then “an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.”14 Fed. R. Civ. P. 41(a)(2). We see no reason for these standards to apply with less force in a qui tam action than they do in any other civil action. As this Court has recently noted, “[i]t could hardly be clearer” that Congress intended the False Claims Act to establish “civil” proceedings, i.e., “lawsuits brought in ac- cordance with the Federal Rules of Civil Procedure,” United States ex rel. Int’l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co., 5 F.4th 315, 336 (3d Cir. 2021).15
[*396]Of course, the FCA does add certain wrinkles. For ex- ample, while Rule 41(a) “obviously does not authorize an in- tervenor-plaintiff to effect involuntary dismissal of the original plaintiff’s claims,” CIMZNHCA, 970 F.3d at 850, the FCA per- mits the Government-as-intervenor to “dismiss the action not- withstanding the objections of the person initiating the action,” 31 U.S.C. § 3730(c)(2)(A). And while a pre-answer notice of dismissal under Rule 41(a)(1)(A) is self-effectuating, “invit[ing] no response from the district court and permit[ting] no interference by it,” Bath & Kitchen, 535 F.3d at 165, the FCA statute, even at that stage, requires the relator be given notice and an opportunity for a hearing before the case is dis- missed, 31 U.S.C. § 3730(c)(2)(A). But these small modifica- tions do not render Rule 41(a) inapplicable. To the contrary, such modifications are expressly contemplated by the Rule it- self, which functions “[s]ubject to . . . any applicable federal statute.” Fed. R. Civ. P. 41(a)(1)(A).
In practice, then, when the Government moves to dis- miss a relator’s case pursuant to § 3730(c)(2)(A), it must do so within the framework of Rule 41(a). The relator must receive notice and an opportunity for a hearing, 31 U.S.C. § 3730(c)(2)(A), and the Government must meet whatever threshold the relevant prong of Rule 41(a) requires. If the de- fendant has yet to answer or move for summary judgment, the Government is entitled to dismissal, Fed. R. Civ.
[*397]P. 41(a)(1)(A), albeit with an opportunity for the relator to be heard,16 31 U.S.C. § 3730(c)(2)(A), subject only to the bedrock constitutional bar on arbitrary Government action.[17] See CIM- ZNHCA, 970 F.3d at 850-52. And if the litigation is already past that “point of no return,” Bath & Kitchen, 535 F.3d at 165, then dismissal must be “only by court order, on terms the court considers proper.” Fed. R. Civ. P. 41(a)(2).
[*398]As an important caveat, we note that, even in a typical case between private parties, dismissal at this later stage “should be allowed unless defendant will suffer some prejudice other than the mere prospect of a second lawsuit,” Estate of Ware v. Hosp. of the Univ. of Pa., 871 F.3d 273, 285 (3d Cir. 2017) (quoting In re Paoli R.R. Yard PCB Litig., 916 F.2d 829, 863 (3d Cir. 1990)), and that rule carries particular force, with constitutional implications in an FCA case, where it is the Gov- ernment seeking to dismiss a matter brought in its name.[18] See 31 U.S.C. § 3730(c)(1) (requiring that, once the Government has intervened in an FCA action, “it shall have the primary re- sponsibility for prosecuting the action”); id. § 3730(c)(2)(A) (allowing the Government to dismiss “notwithstanding the ob- jections of the [relator]”); CIMZNHCA, 970 F.3d at 850 (explaining that the standards set out in Rule 41(a) are limited by “any applicable background constraints on executive con- duct in general”); see also Seila Law, 140 S. Ct. at 2205 (noting that “separation of powers” is a “foundational doctrine”).
[*399]2. The Alternative Approaches Among the Courts of Appeals
While we respect and have carefully weighed the con- sidered views of other courts, we are satisfied that we have chosen the best path forward.
The D.C. Circuit has interpreted § 3730(c)(2)(A) to “give the government an unfettered right to dismiss an action.” Swift, 318 F.3d at 252. It reached that conclusion by analogiz- ing the Government’s motion to the exercise of prosecutorial discretion, id., which is reserved to the executive, and reason- ing that “[n]othing in § 3730(c)(2)(A) purports to deprive the Executive Branch of its historical prerogative to decide which cases should go forward in the name of the United States.” Id. at 253. While the Court acknowledged that § 3730(c)(2)(A)’s hearing requirement “points to a role for the courts in deciding whether the case must go forward despite the government’s de- cision to end it,” it concluded that the “function of a hearing” is “simply to give the relator a formal opportunity to convince the government not to end the case.” Id.
Appellees (alongside amicus United States Chamber of Commerce, Commerce Br. 9-10) have pressed these points with us as well, but we are unconvinced. For one, the analogy to prosecutorial discretion is too loose a fit because qui tam actions involve not just the Government but also the relator in the role of “prosecutors,” each with its own interest in the ac- tion. And as Congress recognized in assuring the relator a hearing on the Government’s motion, those interests can be different.
In addition, reading § 3730(c)(2)(A) to give the Govern- ment “unfettered” discretion to dismiss would make it incongruous with other provisions of the FCA. For example, § 3730(b)(1) requires “the court and the Attorney General [to] give written consent” for the relator to voluntarily dismiss an action. Appellees’ reading thus would mean that the court had more of an oversight role when the Government and relator agreed to dismiss than it would when the Government wanted to force a dismissal against the relator’s will. Likewise, be- cause § 3730(c)(2)(B) requires a court to find a proposed set- tlement, to which a relator objects, to be “fair, adequate, and reasonable,” Appellees’ reading would require more judicial oversight of an opposed settlement than of a dismissal—de- spite the far more severe consequences for the relator.[19] Fi- nally, an unfettered discretion standard creates tension with § 3730(c)(2)(A)’s provision for a hearing, which implies some role for the Article III judge; in contrast, that standard would limit the court’s role to “serv[ing] . . . some donuts and coffee . . . while the parties carry on an essentially private conversa- tion in its presence.” CIMZNHCA, 970 F.3d at 850 (internal quotation omitted).
[*400]Polansky asks us to go the other way and adopt the ra- tional relation test promulgated by the Ninth Circuit and fol- lowed by the Tenth, which is drawn from the former’s substan- tive due process jurisprudence. See Sequoia, 151 F.3d at 1145; Ridenour, 397 F.3d at 936. Under this test, the court requires “(1) identification of a valid government purpose; and (2) a ra- tional relation between dismissal and accomplishment of the purpose.” Sequoia, 151 F.3d at 1145. If the Government sat- isfies that two-prong test, “the burden switches to the relator to demonstrate that dismissal is fraudulent, arbitrary and capri- cious, or illegal.” Id. (internal quotation marks omitted).
[*401]But neither does that slipper fit. The right against arbi- trary government action may provide a constitutional floor, but the Federal Rules of Civil Procedure are built above it, and the Ninth Circuit’s approach omits that structure entirely. And Rule 41(a) duly provides standards for voluntary dismissal, promulgated by the Supreme Court and with Congressional oversight.
In sum, our review of the alternate approaches confirms the one on which we have settled: When the Government de- clines to adopt a relator’s FCA action, and the relator elects to proceed on his or her own, the Government must intervene pur- suant to § 3730(c)(3) before it can seek to dismiss under § 3730(c)(2)(A). And when it does so, its motion to dismiss is governed by the provisions of Rule 41(a).
C. Whether the District Court’s Grant of Dis- missal was a Reasonable Exercise of Discretion
Having clarified the operation of § 3730(c)(2)(A), we now consider the propriety of the District Court’s order in this case granting the Government’s motion to dismiss. While we ordinarily review a district court’s grant of a motion to dismiss de novo, see Chang, 938 F.3d at 386-87 (citing Fowler v. UPMC Shadyside, 578 F.3d 203, 206 (3d Cir. 2009)), we re- view a district court’s order under Rule 41(a)(2) for an abuse of discretion. Carroll v. E One Inc., 893 F.3d 139, 145 (3d Cir. 2018).
We start with the requirement that the Government in- tervene under § 3730(c)(3) before seeking to dismiss the rela- tor’s case. Although the Government did not formally file such a motion before the District Court, that is no cause for remand on this record. Instead, we construe the Government’s motion to dismiss as including a motion to intervene because “inter- vention was in substance what the government sought and in form what the False Claims Act requires.” CIMZNHCA, 970 F.3d at 849 (treating a government motion to dismiss as a mo- tion to intervene as well); see also Swift, 318 F.3d at 252 (as- suming that, if intervention “were . . . a requirement, we could construe the government’s motion to dismiss as including a motion to intervene”). And, by thoroughly examining the Gov- ernment’s stated reasons for moving to dismiss and granting the motion, the District Court necessarily found the Govern- ment had shown the “legally sufficient reason” for intervening that good cause requires. CIMZNHCA, 970 F.3d at 846.
[*402]Moving on to the District Court’s grant of dismissal, we perceive no abuse of discretion. The Court exhaustively exam- ined the interests of the parties, their conduct over the course of the litigation, and the Government’s reasons for terminating the action. It discussed, for instance, the litigation costs that Polansky’s suit imposed on the Government, including “inter- nal staff obligations,” “anticipated . . . document production,” and the need to expend attorney time preparing and defending depositions of CMS personnel. Polansky, 422 F. Supp. 3d at 928. It also noted three events that took place in the run-up to the Government’s motion that justified its interest in discontin- uing the action: (1) the Government and Polansky apparently disagreed on the extent to which Polansky had actually nar- rowed his case pursuant to their agreement; (2) EHR deposed Polansky; and (3) a mere five days before the Government sought to dismiss the case, the District Court overruled the Government’s objections to the Special Master’s rejection of its deliberative process privilege and ordered it to begin pro- ducing documents.
The District Court also adequately considered the prej- udice to the non-governmental parties, concluding that, even though the litigation was at an advanced stage and significant resources had been expended on it by both the parties and the Court, there was little risk of prejudice to EHR because it sup- ported the Government’s motion. As for Polansky, the District Court considered his argument that, by dismissing the case, the Government was “leaving billions of dollars of potential recov- ery on the table,” but concluded that there were “genuine con- cerns” that “the potential benefits he highlights will be real- ized,” both because Polansky maintained he had significantly narrowed his claims and because the prospect of success was doubtful. Id. at 927. The Court also noted that Polansky had engaged in potentially sanctionable conduct during the course of discovery, and that this “behavior was material and plays a role in the final disposition of this case.” Id. at 920.
[*403]In light of this thorough examination and weighing of the interests of all the parties, and Rule 41(a)(2)’s “broad grant of discretion” to shape the “proper” terms of dismissal, we con- clude that District Court did not abuse its discretion in granting the Government’s motion to dismiss on the terms that it did. Carroll, 839 F.3d at 146. We will, therefore, affirm the dis- missal of Polansky’s action.
[*404]