United States v. UCB, Inc. ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-2273
UNITED STATES OF AMERICA ex rel. CIMZNHCA, LLC,
Plaintiff-Appellee,
v.
UCB, INC., et al.,
Defendants,
Appeal of:
UNITED STATES OF AMERICA,
Appellant.
____________________
Appeal from the United States District Court for the
Southern District of Illinois.
No. 3:17-cv-00765-SMY-MAB — Staci M. Yandle, Judge.
____________________
ARGUED JANUARY 23, 2020 — DECIDED AUGUST 17, 2020
____________________
Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.
HAMILTON, Circuit Judge. The False Claims Act allows the
United States government to dismiss a relator’s qui tam suit
over the relator’s objection with notice and opportunity for a
hearing. 31 U.S.C. § 3730(c)(2)(A). The Act does not indicate
2 No. 19-2273
how, if at all, the district court is to review the government’s
decision to dismiss. The D.C. Circuit has said not at all; the
Ninth Circuit has said for a rational basis. Compare Swift v.
United States, 318 F.3d 250 (D.C. Cir. 2003), with United States
ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d
1139 (9th Cir. 1998). In this case, the district court said it
agreed with the Ninth Circuit but applied something closer to
administrative law’s “arbitrary and capricious” standard and
denied dismissal. The government has appealed. The relator
contends we should either dismiss for want of appellate juris-
diction or affirm.
We find that we have jurisdiction and reverse. First, we in-
terpret the Act to require the government to intervene as a
party before exercising its right to dismiss under
§ 3730(c)(2)(A). We think it best, however, to construe the gov-
ernment motion here as a motion to both intervene and dis-
miss. This solves the jurisdictional problem without needing
to create a new category of collateral-order appeals. On the
merits, we view the choice between the competing standards
as a false one, based on a misunderstanding of the govern-
ment’s rights and obligations under the False Claims Act. And
by treating the government as seeking to intervene, which it
should have been allowed to do, we can apply a standard for
dismissal informed by Federal Rule of Civil Procedure 41.
I. Factual and Procedural Background
In 1863, “a series of sensational congressional investiga-
tions” revealed that war-profiteering military contractors had
billed the federal government for “nonexistent or worthless
goods, charged exorbitant prices for goods delivered, and
generally robbed” the government’s procurement efforts.
United States v. McNinch, 356 U.S. 595, 599 (1958). In response,
No. 19-2273 3
Congress passed the False Claims Act, now codified at 31
U.S.C. §§ 3729–3733. The Act authorizes a private person,
called a relator, to enforce its terms by filing suit “for the per-
son and for the United States Government.” § 3730(b)(1). Suits
of this type were once so common that “[a]lmost every” penal
statute could be enforced by them. Adams v. Woods, 6 U.S.
(2 Cranch) 336, 341 (1805). Such suits are called “qui tam”
suits, from a Latin tag meaning, “who as well for the lord king
as for himself sues in this matter.” If the relator’s qui tam ac-
tion is successful, she receives a portion of the recovery as a
bounty; the lion’s share goes to the government. § 3730(d).
The False Claims Act prohibits, among other acts, present-
ing to the government “a false or fraudulent claim for pay-
ment or approval.” § 3729(a)(1)(A). One way to present a false
claim is to present to a federal healthcare program a claim for
payment that violates the Anti-Kickback Statute, 42 U.S.C.
§ 1320a-7b(b), which prohibits giving or receiving “remuner-
ation” in return for such programs’ business. See 42 U.S.C.
§ 1320a-7b(g) (violations of the Anti-Kickback Statute also vi-
olate the False Claims Act). For a limited liability company
called Venari Partners, doing business as the “National Health
Care Analysis Group,” this law presented a business oppor-
tunity.
Venari Partners has four members (Sweetbriar Capital,
LLC; 101 Partners, LLC; Min-Fam-Holding, LLC; and Up-
town Investors, LP), themselves composed of one or two in-
dividual investors, six in total. Venari Partners formed eleven
daughter companies, each for the single purpose of prosecut-
ing a separate qui tam action. All eleven actions allege essen-
tially identical violations of the False Claims Act via the Anti-
4 No. 19-2273
Kickback Statute by dozens of defendants in the pharmaceu-
tical and related industries across the country.
The relator in this case is CIMZNHCA, LLC, one of those
Venari companies. Its complaint, filed in 2017 in the Southern
District of Illinois, alleges that defendants illegally paid phy-
sicians for prescribing or recommending Cimzia, a drug man-
ufactured by defendant UCB, Inc. to treat Crohn’s disease, to
patients who received benefits under federal healthcare pro-
grams. The relator alleges that the illegal kickbacks took the
form of free education services provided by nurses to physi-
cians and their patients and free reimbursement support ser-
vices, that is, assistance with insurance paperwork.
Once the relator filed this action, the government had the
right “to intervene and proceed” as the plaintiff with the “pri-
mary responsibility” for prosecuting it. 31 U.S.C.
§§ 3730(b)(2), 3730(c)(1). The government chose not to exer-
cise that right. The False Claims Act also gives the govern-
ment the right to dismiss the action over the relator’s objection
if the relator is provided notice and an opportunity for a hear-
ing. § 3730(c)(2)(A). This right the government has sought to
exercise. On December 17, 2018, the government filed a mo-
tion to dismiss, representing that it had investigated the Ve-
nari companies’ claims, including CIMZNHCA’s, and found
them “to lack sufficient merit to justify the cost of investiga-
tion and prosecution and otherwise to be contrary to the pub-
lic interest.” The district court held a hearing on the govern-
ment’s motion and issued an opinion denying it.
The court considered first what standard of review ap-
plied to the government’s motion under § 3730(c)(2)(A),
which itself supplies none. The government urged adoption
of the standard announced in Swift v. United States, 318 F.3d
No. 19-2273 5
250, 253 (D.C. Cir. 2003), which gives the government “unfet-
tered” discretion to dismiss. Relator argued for the more de-
manding burden-shifting test announced in United States ex
rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d
1139 (9th Cir. 1998). Under that test, the government must first
identify a “valid government purpose” and then show “a ra-
tional relation between dismissal and accomplishment of the
purpose.” Id. at 1145. If the government does so, the burden
shifts to the relator to show that “dismissal is fraudulent, ar-
bitrary and capricious, or illegal.” Id.
Reasoning that Congress would not command the hollow
ritual of convening a hearing on a preordained outcome (no
one deliberates about the fall of Troy, as Aristotle said), the
district court concluded that Sequoia Orange supplied the
proper standard. Deeming the government’s general evalua-
tion of the Venari companies’ claims to be insufficient as to
CIMZNHCA in particular, and hearing notes of mere “ani-
mus towards the relator” in the government’s arguments, the
court concluded further that the government’s decision to dis-
miss was “arbitrary and capricious” and “not rationally re-
lated to a valid governmental purpose.”
After the district court denied its motion to reconsider, the
government took this appeal, pending which the district court
proceedings have been stayed. Our jurisdiction is contested.
On the merits, the government argues that Swift, not Sequoia
Orange, supplies the proper standard and that it satisfied the
Ninth Circuit’s test in any event. Relator argues that Swift
should be rejected and that the district court correctly applied
Sequoia Orange. We conclude first that we have jurisdiction
and second that the choice presented to us on the merits is a
false one, though the correct answer lies much nearer to Swift
6 No. 19-2273
than Sequoia Orange. We reverse and remand with instructions
to dismiss this action.
II. Analysis
A. The False Claims Act
We begin with an overview of the False Claims Act’s most
relevant provisions.1 A qui tam action under the Act is
brought “for the person and for the United States Govern-
ment” and must be filed “in the name of the Government.” 31
U.S.C. § 3730(b)(1). The relator may voluntarily dismiss the
action “only if the court and the Attorney General give written
consent to the dismissal and their reasons for consenting.” Id.
The relator’s complaint must be filed under seal and may
not be served on the defendants until the court so orders.
§ 3730(b)(2). Upon filing, the relator must serve the govern-
ment with a copy of the complaint and a “written disclosure
of substantially all material evidence” in the relator’s posses-
sion. Id. The government then has sixty days, id., extendable
for “good cause shown,” § 3730(b)(3), to decide whether “to
intervene and proceed with the action” while the complaint
remains under seal. § 3730(b)(2). At the end of the seal period,
“the Government shall (A) proceed with the action, in which
case the action shall be conducted by the Government; or
(B) notify the court that it declines to take over the action, in
which case the person bringing the action shall have the right
to conduct the action.” § 3730(b)(4).
Before 1986, if the government intervened in the action,
the relator’s participation was at an end. In 1986, however,
1 The text of 31 U.S.C. § 3730(b)–(c) is attached as an appendix to this opin-
ion.
No. 19-2273 7
Congress amended the False Claims Act to allow for the rela-
tor’s continued participation even after the government inter-
venes. Allowing two plaintiffs has given rise to a new set of
tensions that the provisions at the heart of this case were de-
signed to manage. See Sequoia Orange, 151 F.3d at 1143–44, cit-
ing United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 745 (9th
Cir. 1993), among others. “If the Government proceeds with
the action,” it assumes “primary responsibility” for prosecut-
ing it. § 3730(c)(1). The relator retains “the right to continue as
a party to the action,” but critically for our purposes, that right
is “subject to the limitations set forth in paragraph (2).” Id.
The most relevant of these limits is the government’s right
to dismiss the action:
The Government may dismiss the action not-
withstanding the objections of the person initi-
ating the action if the person has been notified
by the Government of the filing of the motion
and the court has provided the person with an
opportunity for a hearing on the motion.
§ 3730(c)(2)(A). The other limits are the government’s right to
settle the action “notwithstanding the objections of the person
initiating the action if the court determines, after a hearing,
that the proposed settlement is fair, adequate, and reasonable
under all the circumstances,” § 3730(c)(2)(B); the govern-
ment’s right to seek a court order restraining the relator’s abu-
sive litigation conduct, § 3730(c)(2)(C); and the defendant’s
right to do the same. § 3730(c)(2)(D).
“If the Government elects not to proceed with the action,”
the relator “shall have the right to conduct the action.”
§ 3730(c)(3). The relator’s sole obligations to the government
8 No. 19-2273
thereafter are to supply it on request with copies of all plead-
ings and, at the government’s expense, copies of all deposi-
tion transcripts. Id. The court may “nevertheless permit the
Government to intervene at a later date upon a showing of
good cause.” Id. “Whether or not the Government proceeds
with the action,” the government may seek a stay of discovery
if it would interfere with an ongoing investigation into the
same facts. § 3730(c)(4). Finally, if the government elects to
pursue “any alternate remedy” for the challenged conduct,
the relator may not be cut out; she has “the same rights” in
the alternate proceeding as in the qui tam action. § 3730(c)(5).
B. Appellate Jurisdiction: Appeal from the Denial of a Motion
to Intervene
We must decide our jurisdiction first. West v. Louisville Gas
& Elec. Co., 920 F.3d 499, 503 (7th Cir. 2019). Ordinarily we
have appellate jurisdiction of the district courts’ final judg-
ments under 28 U.S.C. § 1291 and a few categories of interloc-
utory orders under § 1292. Denials of motions to dismiss
rarely fit into those categories, but the government argues
here that the denial of its motion to dismiss under 31 U.S.C.
§ 3730(c)(2)(A) was a “collateral order,” not a final judgment
but by a “practical construction” of 28 U.S.C. § 1291 still a “fi-
nal decision” within its terms. See Ott v. City of Milwaukee, 682
F.3d 552, 554 (7th Cir. 2012) (internal quotation marks omit-
ted). We see no need to create a new category of appealable
collateral orders. In substance, the government appeals a de-
nial of what should be deemed a motion to intervene and then
to dismiss. It is well established that denials of motions to in-
tervene are appealable.
No. 19-2273 9
Collateral orders are orders that are final with respect to
the issue they decide and important enough to be immedi-
ately appealable. Mohawk Industries v. Carpenter, 558 U.S. 100,
103 (2009), citing Cohen v. Beneficial Indus. Loan Corp., 337 U.S.
541, 546 (1949). Protecting the default rule of one appeal per
case, however, means that the universe of appealable collat-
eral orders “must remain narrow and selective in its member-
ship.” Mohawk Industries, 558 U.S. at 113, quoted in Ott, 682
F.3d at 555. The question is not whether the particular order
is collateral but whether “the entire category” of orders to
which it belongs is. JPMorgan Chase Bank, N.A. v. Asia Pulp &
Paper Co., 707 F.3d 853, 868 (7th Cir. 2013), quoting Mohawk,
558 U.S. at 107.
This categorical analysis is difficult here because the type
of order appealed here is very rare. In the history of the False
Claims Act since 1986, the government tells us, only one other
district court has denied its § 3730(c)(2)(A) motion to dismiss,
which the Ninth Circuit recently declined to hold a collateral
order.2 The power of a non-party to force dismissal of an-
other’s lawsuit is otherwise unheard of in our law. See, e.g.,
Fed. R. Civ. P. 17(a)(3) (real party in interest must “ratify, join,
2 United States v. Academy Mortgage Corp., No. 3:16-cv-02120-EMC, 2018
WL 3208157, at *2–*3 (N.D. Cal. June 29, 2018), appeal dismissed sub nom.
United States ex rel. Thrower v. Academy Mortgage Corp., No. 18-16408, ___
F.3d ___, 2020 WL 4462130 (9th Cir. Aug. 4, 2020). The Ninth Circuit in
Thrower rejected the government’s argument that an order denying a mo-
tion to dismiss under 31 U.S.C. § 3730(c)(2)(A) is appealable as a collateral
order. The Thrower court was not presented with and did not consider the
possibility of treating the government’s motion to dismiss as a motion
both to intervene and to dismiss, as suggested in Swift v. United States, 318
F.3d 250, 252 (D.C. Cir. 2003), which is the path we follow in finding that
we have jurisdiction over this appeal, as explained below.
10 No. 19-2273
or be substituted into” action brought on its behalf); Minneap-
olis-Honeywell Regulator Co. v. Thermoco, Inc., 116 F.2d 845, 847
(2d Cir. 1941) (L. Hand, J.) (“[T]he companies could not make
any motion unless they became parties … although they
might … have combined a motion to intervene with a motion
to dismiss.”).
1. Eisenstein, Footnote 2
The government argues that the jurisdictional issue has al-
ready been resolved in its favor by United States ex rel. Eisen-
stein v. City of New York, 556 U.S. 928 (2009), the Supreme
Court’s most recent word on the relationship between the re-
lator and the government in a qui tam case in which the gov-
ernment has declined to intervene. The holding of Eisenstein
is that, absent intervention, the government is not a “party”
for the purpose of determining applicable appeal deadlines.
556 U.S. at 937; see 28 U.S.C. § 2107(b) (deadline where United
States is “party”); Fed. R. App. P. 4(a)(1)(B) (same). Along the
way, the Court observed that, the government’s non-party
status notwithstanding, it need not intervene to appeal “any
order” in a qui tam suit. 556 U.S. at 931 n.2. Rather, its imme-
diate appeal would lie from the relator’s voluntary dismissal
of the case without the government’s written consent. Id., cit-
ing 31 U.S.C. § 3730(b)(1). And denials of motions to intervene
have long been held immediately appealable. Id., citing
§ 3730(c)(3).
The government maintains there is “no basis for distin-
guishing” Eisenstein’s examples from an order denying a mo-
tion to a dismiss under § 3730(c)(2)(A). But the bases are obvi-
ous: voluntary dismissal ends the case, and the immediate ap-
pealability of a denial of intervention is even older than the
collateral-order doctrine announced in Cohen. See Brotherhood
No. 19-2273 11
of R.R. Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 524–
25 (1947). Footnote 2 of Eisenstein does not stand for the prop-
osition stated by the government. It nonetheless indicates the
correct path to solving the jurisdictional problem: treat the
government’s motion to dismiss as a motion both to intervene
and to dismiss.
2. Intervention in Substance
An intervenor comes between the original parties to ongo-
ing litigation and interposes between them its claim, interest,
or right, which may be adverse to either or both of them. See
Eisenstein, 556 U.S. at 933; Rocca v. Thompson, 223 U.S. 317,
330–31 (1912). That is exactly what the government wants to
do here. The government claims a superior right to dispose of
this lawsuit between the relator and the defendants by ending
it on terms it deems suitable. The relator holds the present
statutory right “to conduct the action,” 31 U.S.C.
§ 3730(b)(4)(B), as well as a partial congressional assignment
of any resulting damages, Vermont Agency of Nat. Res. v. United
States ex rel. Stevens, 529 U.S. 765, 773 (2000), both of which the
government asserts the right to nullify. The defendants, as
their pending motions to dismiss reveal, desire the finality of
a dismissal with prejudice. The government asserts the right
to deny defendants that finality by having the action dis-
missed with prejudice as to the relator but without prejudice
as to it. In sum, the government wants a say—the final say—
in conducting this lawsuit. The district court’s order denying
that wish is in substance an order denying a motion to inter-
vene.
12 No. 19-2273
3. Intervention in Form
There is another reason to construe for jurisdictional pur-
poses the government’s motion to dismiss as a motion to in-
tervene and dismiss: it ought to have been filed that way to
begin with. Cf. Swift v. United States, 318 F.3d 250, 252 (D.C.
Cir. 2003) (if government were required to intervene before
dismissing, “we could construe the government’s motion to
dismiss as including a motion to intervene”).
As a matter of form, the government did not move to in-
tervene before filing its motion to dismiss under
§ 3730(c)(2)(A). Several courts of appeals have expressly or
tacitly endorsed its prerogative not to do so. Chang v. Chil-
dren’s Advocacy Ctr. of Del., 938 F.3d 384, 386 (3d Cir. 2019);
Ridenour v. Kaiser-Hill Co., 397 F.3d 925, 933–34 (10th Cir.
2005); Swift, 318 F.3d at 251–52; United States ex rel. Kelly v. Boe-
ing Co., 9 F.3d 743, 753 n.10 (9th Cir. 1993); see also United
States v. Everglades Coll., Inc., 855 F.3d 1279, 1285–86 (11th Cir.
2017) (settlements under § 3730(c)(2)(B)). These decisions did
not address appeals of denials of dismissal, but adhering to
them in this case of a denial would require in effect creation
of a new category of appealable collateral orders. The Su-
preme Court has firmly discouraged that step. See Mohawk,
558 U.S. at 113–14.
There is a better solution. We read the False Claims Act as
requiring the government to intervene before exercising any
right under § 3730(c)(2). Accord, United States ex rel. Poteet v.
Medtronic, Inc., 552 F.3d 503, 519 (6th Cir. 2009) (“Section
3730(c)(2)(A) applies only when the government has decided
to ‘proceed[] with the action’ and has assumed ‘primary re-
sponsibility for prosecuting the action.’”).
No. 19-2273 13
a. Text and Structure of § 3730(c)
To explain our solution of the jurisdictional problem, we
begin with the statute’s text. E.g., Ross v. Blake, 136 S. Ct. 1850,
1856 (2016). Subsection (c) of § 3730 bears the heading,
“Rights of the parties to qui tam actions.” One would thus ex-
pect subsection (c) to treat the rights of parties to qui tam ac-
tions, which the government is not unless and until “it inter-
venes in accordance with the procedures established by fed-
eral law.” Eisenstein, 556 U.S. at 933. In fact, the structure of
subsection (c) guides its proper interpretation as to which
rights litigants possess under which procedural circum-
stances. See Ortega v. Holder, 592 F.3d 738, 743 (7th Cir. 2010)
(“we must consider not only the words of the statute, but also
the statute’s structure.”). Each paragraph of subsection (c)—
except paragraph (2)—announces at its outset the procedural
posture to which it applies. Paragraph (1) applies “If the Gov-
ernment proceeds with the action.” Paragraph (3) applies “If
the Government elects not to proceed with the action.” Para-
graph (4) applies “Whether or not the Government proceeds
with the action.” Paragraph (5) applies “Notwithstanding
subsection (b),” that is, notwithstanding the relator’s qui tam
action altogether. Where, then, does paragraph (2) fit into this
structure?
Nowhere, the D.C. Circuit answered in Swift. According to
Swift, paragraph (2) is entirely free-floating; it is not “con-
strained by” and operates “independent[ly] of” the rest of
subsection (c), including specifically paragraph (1). 318 F.3d
at 252. There are several reasons to question this reading.
First, it makes surplusage of paragraph (4)’s introductory
phrase, “Whether or not the Government proceeds with the
action.” But see, e.g., Reiter v. Sonotone Corp., 442 U.S. 330, 339
14 No. 19-2273
(1979) (anti-surplusage canon); see also Antonin Scalia &
Bryan A. Garner, Reading Law 156 (2012) (“Material within an
indented subpart relates only to that subpart.”). If the back-
ground assumption of subsection (c) were that each of its par-
agraphs applied no matter whether the government had in-
tervened, Congress would not have specified that paragraph
(4), and only paragraph (4), applies “Whether or not the Gov-
ernment proceeds with the action.”
The Swift analysis also makes surplusage of the provision
in paragraph (1) that a post-intervention relator has the right
to continue as a party “subject to the limitations set forth in
paragraph (2).” Again, if the government enjoyed its rights
under paragraph (2) under all circumstances and in any pos-
ture, there would have been no reason to specify that the re-
lator’s continued participation as a party, and only the rela-
tor’s continued participation as a party, is “subject to” para-
graph (2).
Along these lines, § 3730(b)(4)(B) gives the relator “the
right to conduct the action”—without qualification—when
the government has declined to intervene. That phrase is
picked up by paragraph (c)(3), which provides that, “If the
Government elects not to proceed with the action,” the relator
“shall have the right to conduct the action,” while reserving
certain rights (to be served with copies of certain papers, to
intervene later for good cause) to the government. Thus, when
Congress wanted to qualify the relator’s “right to conduct the
action” absent intervention, it did so in paragraph (c)(3). It
would be odd if the unqualified “right to conduct the action”
in subparagraph (b)(4)(B) and the nearly unqualified “right to
conduct the action” in paragraph (c)(3) were in fact the pro-
foundly qualified right to conduct the action so long as the
No. 19-2273 15
government does not wish to have it dismissed or settled un-
der subparagraphs (c)(2)(A) or (B)—neither of which even
mentions the relator’s “right to conduct the action.”
So where does paragraph (2) best fit in? The second half of
the paragraph plainly operates against the backdrop of gov-
ernment intervention. Specifically, subparagraph (C) pro-
vides for “limitations” on the relator’s participation where its
“unrestricted participation … would interfere with or unduly
delay the Government’s prosecution of the case.” (Emphasis
added.) Similarly, subparagraph (D) provides that the rela-
tor’s “participation” may be “limit[ed]” where its “unre-
stricted participation” would harass or unduly burden the de-
fendant. Obviously a defendant cannot “restrict the participa-
tion” of its sole adversary in a lawsuit. We find subparagraph
(D) even more telling than subparagraph (C) for our purposes
because subparagraph (C) makes the government’s participa-
tion explicit while subparagraph (D) tacitly assumes it—sug-
gesting that so too does the rest of paragraph (2).
We conclude that paragraph (2) fits in best right where
paragraph (1) puts it: as a limit on the right of the relator to
continue as a party after the government has intervened. It
can have no other independent operation without disrupting
the structure of the statute as a whole. Swift reasoned that, to
justify this reading, “either § 3730(c)(2) would have to be a
subsection of § 3730(c)(1)—which it is not—or § 3730(c)(2)
would have to contain language stating that it is applicable
only in the context of § 3730(c)(1)—which it does not.” 318
F.3d at 252. The first minor premise, that paragraph (c)(2) is
not a subsection of paragraph (c)(1), is true as a typographic
matter but otherwise fails to capture how the five paragraphs
of subsection (c) relate to one another in text and logic. As our
16 No. 19-2273
premises differ, so too does our conclusion: paragraph (c)(2)
is better read to operate only “If the Government proceeds
with the action.” § 3730(c)(1).
The remaining arguments advanced by Swift and cases
adopting its reading against a need for intervention to dismiss
are not persuasive. First, Swift neutered the binary choice put
to the government by Congress—intervene, § 3730(b)(4)(A),
or decline, § 3730(b)(4)(B)—by finding a third way to dismiss
without intervention under § 3730(c)(2)(A). From the provi-
sion that the government “may elect to intervene and proceed
with the action,” § 3730(b)(2), the court reasoned that
“[e]nding the case by dismissing it is not proceeding with the
action; to ‘proceed with the action’ means … that the case will
go forward with the government running the litigation.” 318
F.3d at 251. Accord, Everglades Coll., Inc., 855 F.3d at 1285 (set-
tlement under § 3730(c)(2)(B)); Ridenour, 397 F.3d at 933.
In our view, this awkward reading of the provision is not
the better reading. “Proceeding” in the litigation context is
chiefly defined as “the regular and orderly progression of a
lawsuit.” Proceeding, Black’s Law Dictionary (4th ed. 2011).
We find no support in Swift or elsewhere for the proposition
that the regular and orderly progression of a lawsuit requires
litigating to favorable judgment or involuntary dismissal, to
the exclusion of voluntary dismissal, particularly upon settle-
ment. If “proceed” were understood that way, how much lit-
igating would the government have to do before it could then
dismiss without running afoul of the command to “proceed”?
This reading of “proceed” suggests further that “electing not
to proceed” would include electing to dismiss voluntarily.
That cannot be right because paragraph (c)(3) gives the relator
“the right to conduct the action” where “the Government
No. 19-2273 17
elects not to proceed with the action.” One cannot “conduct”
a lawsuit that has been dismissed.
b. Serious Constitutional Doubts?
Second, the Tenth Circuit in Ridenour, invoking the Take
Care Clause of Article II, § 3, and the constitutional-doubt
canon of statutory interpretation, see Zadvydas v. Davis,
533 U.S. 678, 689 (2001), rejected the reading we adopt here in
part because “to condition the Government’s right … to dis-
miss an action in which it did not initially intervene upon a
requirement of … good cause [under § 3730(c)(3)] would
place the FCA on constitutionally unsteady ground” by “un-
necessarily bind[ing] the Government.” 397 F.3d at 934; see
also Kelly, 9 F.3d at 753 n.10 (because statute does not “pro-
hibit[]” it, interpretation allowing dismissal without interven-
tion is “entirely appropriate” as illustration of “meaningful
[executive] control” over relators’ FCA suits). Respectfully,
we do not find constitutional doubt a sound reason to follow
this path.
The canon of constitutional doubt teaches that when two
interpretations of a statute are “fairly possible,” one of which
raises a “serious doubt” as to the statute’s constitutionality
and the other does not, a court should choose the interpreta-
tion “by which the question may be avoided.” Zadvydas, 533
U.S. at 689; see United States ex rel. Att’y General v. Del. & Hud-
son Co., 213 U.S. 366, 407–08 (1909). The canon does not hold
that any reading of a statute not expressly “prohibited” must
be adopted if it will relieve the executive of any burden of un-
defined weight which the judiciary deems without analysis to
be “unnecessary.” But that is how the canon was applied in
Ridenour and Kelly. In our view, this analysis is misguided for
two reasons. First, it indulges every presumption in favor of
18 No. 19-2273
the statute’s invalidity rather than its validity. Second, it
simply does not show that the False Claims Act is in serious
danger of unconstitutionality unless dismissal under
§ 3730(c)(2)(A) applies only after the government has declined
to intervene.
First, Ridenour and Kelly inverted the constitutional-doubt
canon, and constitutional avoidance principles generally, by
creating constitutional problems in one section of a statute to
solve them in a different section of the statute. “Good cause”
is a uniquely flexible and capacious concept. See Good Cause,
s.v. Cause, Black’s Law Dictionary (4th ed. 2011) (“A legally
sufficient reason.”). But neither Ridenour nor Kelly offered an
interpretation of what constitutes “good cause” under
§ 3730(c)(3). Neither acknowledged the variety of situations
calling for that decision.3 Both assumed without analysis that
any “good cause” requirement would tend to fetter the exec-
utive unconstitutionally—neglecting, at minimum, the possi-
bility that avoiding offense to the separation of powers in a
case that actually risks it would itself weigh heavily in any
“good cause” determination.
3 For example, the Article II implications of denying good cause to inter-
vene could vary widely. Compare a case where the government seeks to
dismiss at an early stage because it has consistently held the challenged
conduct to be lawful and desirable, to a case where the government seeks
to dismiss on the eve of trial of meritorious claims only to protect a high-
ranking executive official’s private business interests. See Yick Wo v. Hop-
kins, 118 U.S. 356, 372–74 (1886), cited by Heckler v. Chaney, 470 U.S. 821,
838 (1985); see also Andrew Kent et al., Faithful Execution and Article II,
132 Harv. L. Rev. 2111 (2019) (original public meaning of duty to “faith-
fully execute” was “fiduciary”).
No. 19-2273 19
Both decisions thus defaulted to the most constitutionally
offensive reading of § 3730(c)(3) rather than the least. Both
thereby created rather than avoided doubtful questions of
constitutional law, which then required “solving” by doubt-
ful interpretation of § 3730(c)(2)(A). Our duty, though, is to
indulge “[e]very presumption … in favor of the validity of the
statute.” Graves v. Minnesota, 272 U.S. 425, 428 (1926). Our
reading of § 3730(c)(2)(A), by contrast, presumes § 3730(c)(3)
is valid on its face and simply defers consideration of genuine
constitutional concerns until they ripen in a specific context
and are thus more properly presented for decision. See
Ashwander v. T.V.A., 297 U.S. 288, 347 (1936) (Brandeis, J., con-
curring).
Second, because neither Ridenour nor Kelly offered an ac-
count of what “good cause” requires nor of what Article II re-
quires in relation to “good cause” dismissals, neither decision
raises a serious possibility that the constitutionality under Ar-
ticle II of the False Claims Act depends on a particular con-
struction of § 3730(c)(2)(A). As a general matter, the Supreme
Court has reserved decision on the constitutionality under Ar-
ticle II of qui tam actions. Vermont Agency of Nat. Res. v. United
States ex rel. Stevens, 529 U.S. 765, 778 n.8 (2000). Their ancient
pedigree, however, together with their widespread use at the
time of the Founding, suggests that the False Claims Act as a
whole is not in imminent danger of unconstitutionally usurp-
ing the executive power. See id. at 774–77 (“originated around
the end of the 13th century”); Marvin v. Trout, 199 U.S. 212,
225 (1905) (“in existence for hundreds of years in England,
and in this country ever since the foundation of our govern-
ment”); 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
20 No. 19-2273
William Blackstone, Commentaries *160 (Forfeitures created
by penal statutes “more usually are given at large, to any
common 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.”). Indeed, a common
function of qui tam actions, and one of the earliest, has been
to regulate the exercise of executive power itself. Randy Beck,
Qui Tam Litigation Against Government Officials, 93 Notre Dame
L. Rev. 1235, 1260–61 (2018) (discussing Statute of York 1318,
12 Edw. Ch. 2); id. at 1269–1304 (early American use of such qui
tam actions).
While reserving decision on the Article II consequences, as
a matter of statutory interpretation, Stevens rejected an agency
theory of the government-relator relationship under the False
Claims Act: “to say that the relator here is simply the statuto-
rily designated agent of the United States, in whose
name … the suit is brought … is precluded … by the fact that
the statute gives the relator himself an interest in the lawsuit.”
529 U.S. at 772 (some emphasis omitted). That interest is re-
flected in the rights retained by the relator even after the gov-
ernment has intervened. Id., citing § 3730(c)(1), (c)(2)(A), &
(c)(2)(B). It is reflected as well in “the right to conduct the ac-
tion” that indisputably belongs to the relator once the govern-
ment declines to intervene and can be wrested from the rela-
tor later only on a showing of good cause. § 3730(b)(4)(B) &
(c)(3). That right includes, for example, the right to choose
which claims to pursue, the right to engage the machinery of
discovery, and the right to settle claims without government
oversight (excepting the government’s veto power under
§ 3730(b)(1) if the settlement is entered as a voluntary dismis-
sal, though it need not be).
No. 19-2273 21
We are not persuaded that a serious marginal risk of un-
constitutionality is created by including dismissal in the list
of powers reclaimable by the government only for good
cause. The power to terminate the action is simply part of the
power “to conduct the action.” See Fed. R. Civ. P. 41(a); see
also Kelly, 9 F.3d at 754 & n.14 (“[O]nce prosecution has been
initiated, the government has greater authority to … ulti-
mately end the litigation in a qui tam action than it does in an
independent counsel’s action;” true no matter whether
§ 3730(c)(2)(A) requires intervention), applying Morrison v.
Olson, 487 U.S. 654 (1988). The government’s automatic inter-
vention rights during the seal period are themselves extenda-
ble only for “good cause,” § 3730(b)(3), and even in criminal
cases, the government must have “leave of court” to dismiss
the prosecution. Fed. R. Crim. P. 48(a); Rinaldi v. United States,
434 U.S. 22, 29–32 (1977). Accordingly, we do not see a serious
possibility that the constitutionality of the False Claims Act
will stand or fall on a requirement that the government show
good cause to intervene and dismiss after its automatic inter-
vention rights have expired.
We have warned before that the constitutional-doubt
canon “must be used with care, for it is a closer cousin to in-
validation than to interpretation. It is a way to enforce the con-
stitutional penumbra.” United States v. Marshall, 908 F.2d 1312,
1318 (7th Cir. 1990) (en banc); see also Richard A. Posner, The
Federal Courts 285 (1985) (The canon “enlarge[s] the … reach
of constitutional prohibition … to create a … ‘penumbra’ that
has much the same prohibitory effect as the … Constitution
itself.”).
The application of the canon in Ridenour and Kelly illus-
trates this warning. The canon can produce a hazy penumbra
22 No. 19-2273
of quasi-constitutional law that is used to limit legislative
power when statutes are construed, without constitutional
adjudication of a concrete case or controversy, to exclude all
“unnecessar[y]” executive restrictions and to require all “en-
tirely appropriate” executive prerogatives. See Ridenour, 397
F.3d at 934; Kelly, 9 F.3d at 753 n.10.
Our task is not to chip away at the legislation under the
guise of interpreting it until every conceivable constitutional
concern is assuaged. See Salinas v. United States, 522 U.S. 52,
59–60 (1997), citing among others United States v. Albertini, 472
U.S. 675, 680 (1985). Our task is to apply the Act until a party
with standing convinces us or the Supreme Court that to do
so would be unconstitutional. The constitutional-doubt canon
can be used to resolve genuine doubts when the language is
ambiguous and the constitutional danger clear and present.
Marshall, 908 F.2d at 1318. It should not be used where, as
here, the constitutional questions are more dubious than the
statutory text. Statutory clarity should not yield to penumbral
obscurity.
In sum, we treat the government’s motion to dismiss as a
motion both to intervene and then to dismiss under
§ 3730(c)(3) because intervention was in substance what the
government sought and in form what the False Claims Act re-
quires. Cf. Swift, 318 F.3d at 252 (“[I]f there were such a re-
quirement, we could construe the government’s motion to
dismiss as including a motion to intervene.”). The Supreme
Court in Eisenstein could not “disregard” the “congressional
assignment of discretion” to the government to intervene un-
der the Act by treating the government as a party “even after
it has declined to assume the rights and burdens attendant to
full party status.” 556 U.S. at 933–34. Neither will we. The
No. 19-2273 23
government cannot eat its cake and have it too. If the govern-
ment wishes to control the action as a party, it must intervene
as a party, as provided for by Congress.
Having concluded that the government’s case for dismis-
sal was not even rational, the district court here has neces-
sarily expressed its view on the government’s lack of “good
cause” to intervene under the Act. Accordingly, we have ju-
risdiction over the appeal of what amounted to an order deny-
ing a motion to intervene. E.g., Planned Parenthood of Wis., Inc.
v. Kaul, 942 F.3d 793, 796–97 (7th Cir. 2019). We may proceed
to the merits.
C. Merits: The Government Was Entitled to Dismissal
Treating the government as having sought to intervene
solves the jurisdictional problem and offers a standard on the
merits of dismissal, in the absence of a specific standard in 31
U.S.C. § 3730(c)(2)(A). The standard is that provided by the
Federal Rules of Civil Procedure, as limited by any more spe-
cific provision of the False Claims Act and any applicable
background constraints on executive conduct in general. In
this case, no such substantive limits apply, so the Rules are
the beginning and the end of our analysis.
Federal Rule of Civil Procedure 41(a)(1)(A)(i) provides
that “the plaintiff may dismiss an action” by serving a notice
of dismissal any time “before the opposing party serves either
an answer or a motion for summary judgment.” Dismissal is
without prejudice unless the notice states otherwise. Fed. R.
Civ. P. 41(a)(1)(B). This right is “absolute.” Marques v. Federal
Reserve Bank of Chi., 286 F.3d 1014, 1017 (7th Cir. 2002). “[O]ne
doesn’t need a good reason, or even a sane or any reason” to
24 No. 19-2273
serve notice under the Rule, id., and the notice is self-execut-
ing and case-terminating. Id. at 1018; Smith v. Potter, 513 F.3d
781, 782–83 (7th Cir. 2008). In other words, once a valid Rule
41(a) notice has been served, “the case [is] gone; no action re-
main[s] for the district judge to take,” and her further orders
are void. Smith, 513 F.3d at 782–83. Here, the government filed
its “motion to dismiss” before the defendants had answered
or moved for summary judgment, seeking dismissal without
prejudice as to it and with prejudice as to the relator. It does
not matter that the paper was labeled a “motion” rather than
a “notice.” Id. at 782. That looks like the end of the case, on
terms of the government’s choosing.
Actually, that was almost the end of the case because the
provisions of Rule 41(a) are “[s]ubject to … any applicable
federal statute.” Fed. R. Civ. P. 41(a)(1)(A). By itself, Rule 41(a)
provides that “the plaintiff may dismiss an action,” id., which
obviously does not authorize an intervenor-plaintiff to effect
involuntary dismissal of the original plaintiff’s claims. See
Washington Elec. Coop., Inc. v. Mass. Mun. Wholesale Elec. Co.,
922 F.2d 92, 97 (2d Cir. 1990). But § 3730(c)(2)(A) provides oth-
erwise. Picking up the language of Rule 41, the statute pro-
vides: “The Government may dismiss the action” without the
relator’s consent if the relator receives notice and opportunity
to be heard. § 3730(c)(2)(A). This procedural limit is the only
authorized statutory deviation from Rule 41. Cf.
§ 3730(c)(2)(B) (authorizing settlement without relator’s con-
sent only “if the court determines, after a hearing, that the
proposed settlement is fair, adequate, and reasonable under
all the circumstances”). Nor, because § 3730(c)(2)(A) twice re-
fers to the government’s “motion,” should the statute be con-
strued to eliminate the right to dismiss under the first half of
Rule 41(a), whose language it mirrors. See Adams v. Woods, 6
No. 19-2273 25
U.S. (2 Cranch) 336, 337, 341 (1805) (Marshall, C.J.) (where
statute of limitations provided that no person shall be “prose-
cuted, tried or punished … for any fine or forfeiture …, unless
the indictment or information” was filed within two years, stat-
ute was construed to bar actions of debt qui tam: otherwise “a
distinct member of the sentence … would be rendered almost
totally useless”). Here, the relator received notice and took its
opportunity to be heard. Once these had been accomplished,
that should have been the end of the case.
This conclusion may seem counterintuitive. The law does
not require the doing of a useless thing. Mashi v. I.N.S., 585
F.2d 1309, 1314 (5th Cir. 1978). What, then, is the purpose of
the statute’s additional process if the government’s litigation
right is absolute and there is no substantive standard to ap-
ply? Congress sometimes demands that parties to a nascent
legal dispute simply “communicate in some way” to attempt
to resolve the dispute without court action, and there the ju-
dicial role is confined to ensuring that the communication has
in fact taken place on the terms specified by statute. Mach
Mining, LLC v. E.E.O.C., 575 U.S. 480, 494 (2015) (Title VII con-
ciliation); cf. Fed. R. Civ. P. 26(c)(1) (parties must confer or at-
tempt to confer before seeking court order on discovery dis-
pute); Fed. R. Civ. P. 37(a)(1) (same). In such cases, however,
the court is not called upon to serve as a mere convening au-
thority—“and perhaps,” as the district judge put it here,
“serve you some donuts and coffee”—while the parties carry
on an essentially private conversation in its presence. Like the
district court, we find unpersuasive Swift’s suggestion that
“the function of a hearing when the relator requests one is
simply to give the relator a formal opportunity to convince
the government not to end the case.” 318 F.3d at 253.
26 No. 19-2273
Not every case, though, will be like this one. For example,
if the conditions of Rule 41(a)(1) do not apply, “an action may
be dismissed at the plaintiff’s request only by court order, on
terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2).
Thus, if the government’s chance to serve notice of dismissal
has passed, see Fed. R. Civ. P. 41(a)(1)(A)(i), and the relator by
hypothesis refuses to agree to dismissal, see Fed. R. Civ. P.
41(a)(1)(A)(ii), then a hearing under § 3730(c)(2)(A) could
serve to air what terms of dismissal are “proper.” Cf. Swift,
318 F.3d at 252–53.
Further, there are always background constraints on exec-
utive action, even in the quasi-prosecutorial context of qui
tam actions and the decisions to dismiss them. Heckler v.
Chaney, 470 U.S. 821 (1985), cited by the government here, is
not to the contrary. Heckler held that an administrative
agency’s decision not to take certain “investigatory and en-
forcement actions” had been “committed to agency discretion
by law” and was thus not subject to judicial review under the
Administrative Procedure Act. 470 U.S. at 824, 838; see 5
U.S.C. § 701(a)(2).
Heckler is an imperfect fit for the False Claims Act because
the Court relied in part on the fact that “when an agency re-
fuses to act it generally does not exercise its coercive power
over an individual’s liberty or property rights.” 470 U.S. at 832
(emphasis omitted). That is not the case when the government
dismisses a relator’s action under the False Claims Act be-
cause “the statute gives the relator himself an interest in the
lawsuit” as well as a partial assignment of the government’s
damages. Vermont Agency of Nat. Res. v. United States ex rel. Ste-
vens, 529 U.S. 765, 772, 773 (2000); cf. Logan v. Zimmerman
Brush Co., 455 U.S. 422, 428–430 (1982) (Due Process Clause
No. 19-2273 27
protects causes of action); id. at 438 (Blackmun, J., concurring
for four Justices) (same for Equal Protection Clause).
More important, Heckler reserved decision on what result
would follow if there were a “colorable claim … that the
agency’s refusal to institute proceedings violated any consti-
tutional rights” of the plaintiffs. 470 U.S. at 838. Its accompa-
nying citation to Yick Wo v. Hopkins suggests the limits of ex-
ecutive nonenforcement decisions:
[E]nforcing these notices may … bring ruin
to … those against whom they are directed,
while others, from whom they are withheld,
may be actually benefited by what is thus done
to their neighbors; and, when we remember that
this action of non-action may proceed from en-
mity or prejudice, from partisan zeal or animos-
ity, from favoritism and other improper influ-
ences …, it becomes unnecessary to sug-
gest … the injustice capable of being wrought.
118 U.S. 356, 373 (1886); see Heckler, 470 U.S. at 839 (Brennan,
J., concurring) (“It is possible to imagine other nonenforce-
ment decisions made for entirely illegitimate reasons, for ex-
ample, … in return for a bribe.”).
In this light, Sequoia Orange may be read to hold no more
than that the government’s § 3730(c)(2)(A) dismissal may not
violate the substantive component of the Due Process Clause.
Demanding “no greater justification … than is mandated by
the Constitution itself,” Sequoia Orange equated its rational-
relation test to the test used to determine “whether executive
action violates substantive due process.” 151 F.3d at 1145,
1146. Swift rejected as contrary to Heckler the Sequoia Orange
28 No. 19-2273
point that “arbitrary or irrational” decisions not to prosecute
could violate due process, 318 F.3d at 253, but Heckler does not
warrant such a strong statement. See Yick Wo, 118 U.S. at 370
(no room “for the play and action of purely personal and ar-
bitrary power”). In arguing a similar case before the Ninth
Circuit,4 the government suggested that its § 3730(c)(2)(A)
dismissal may not violate the Equal Protection Clause. See
Oyler v. Boles, 368 U.S. 448, 456 (1962). Before this court, the
government suggested, and even Swift entertained the possi-
bility of, review for fraud on the court. See 318 F.3d at 253. We
agree in principle with both suggestions, though we hope that
these generous limits would be breached rarely if ever. We say
only that in exceptional cases they could supply grist for the
hearing under § 3730(c)(2)(A).
Not in this case, though. Wherever the limits of the gov-
ernment’s power lie, this case is not close to them. At bottom,
the district court faulted the government for having failed to
make a particularized dollar-figure estimate of the potential
costs and benefits of CIMZNHCA’s lawsuit, as opposed to the
more general review of the Venari companies’ activities un-
dertaken and described by the government. No constitutional
or statutory directive imposes such a requirement. None is
found in the False Claims Act. The government is not required
to justify its litigation decisions in this way, as though it had
to show “reasoned decisionmaking” as a matter of adminis-
trative law, as in, for example, Motor Vehicle Mfrs. Ass’n v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 51–52 (1983).
We must disagree with the suggestion that the govern-
ment’s decision here fell short of the bare rationality standard
4 See n.2, supra.
No. 19-2273 29
borrowed by Sequoia Orange from substantive due process
cases. “[T]he Due Process Clause was intended to prevent
government officials from abusing their power, or employing
it as an instrument of oppression,” and “only the most egre-
gious official conduct can be said to be arbitrary in the consti-
tutional sense.” County of Sacramento v. Lewis, 523 U.S. 833, 846
(1998) (internal quotation marks and alterations omitted); see
also Yick Wo, 118 U.S. at 369–70 (“[O]ur institutions of govern-
ment … do not mean to leave room for the play and action of
purely personal and arbitrary power.”). Executive action is
not due process of law when it “shocks the conscience;” when
it “offend[s] even hardened sensibilities;” or when it is “too
close to the rack and the screw to permit of constitutional dif-
ferentiation.” Rochin v. California, 342 U.S. 165, 172 (1952).
The government proposed to terminate this suit in part be-
cause, across nine cited agency guidances, advisory opinions,
and final rulemakings, it has consistently held that the con-
duct complained of is probably lawful. Not only lawful, but
beneficial to patients and the public. As the government ar-
gued in the district court, “These relators”—created as invest-
ment vehicles for financial speculators—“should not be per-
mitted to indiscriminately advance claims on behalf of the
government against an entire industry that would undermine
… practices the federal government has determined
are … appropriate and beneficial to federal healthcare pro-
grams and their beneficiaries.” This is not government irra-
tionality. It oppresses no one and shocks no one’s conscience.5
5 At the hearing, the government cited the following: Medicare and State
Health Care Programs, HHS Final Rule, 81 Fed. Reg. 88,368 (Dec. 7, 2016);
Special Fraud Alert, HHS Notice, 79 Fed. Reg. 40,115 (July 11, 2014); Med-
icare and State Health Care Programs, HHS Final Rule, 78 Fed. Reg. 79,202
30 No. 19-2273
Accordingly, where the government’s conduct does not
bump up against the Rules, the statute, or the Constitution,
the notice and hearing under § 3730(c)(2)(A) serve no great
purpose. But that will not be true in every case. Our reading
of § 3730(c)(2)(A) does not render its process futile as a general
matter. Rather, this particular relator simply had no substan-
tive case to make at the hearing to which the statute entitled
it. Whenever a party has the right to invoke the court’s aid, it
has the obligation to do so with at least a non-frivolous expec-
tation of relief under the governing substantive law. Fed. R.
Civ. P. 11(b). That is not always possible, but that does not
make the right meaningless.
In any event, the danger that the § 3730(c)(2)(A) hearing
may often serve little purpose does not justify imposing on
the government in each case the burden of satisfying Sequoia
Orange’s “two-step test” before the burden is put back on the
relator to show unlawful executive conduct. 151 F.3d at 1145;
cf. United States v. Armstrong, 517 U.S. 456, 464 (1996) (“in the
absence of clear evidence to the contrary,” courts presume
regularity of prosecutorial decision-making). Nor does a Sen-
ate report on an unenacted version of the 1986 amendments
frame a proper standard for § 3730(c)(2)(A) dismissals where
Congress itself has supplied none in the enacted statute. See
Swift, 318 F.3d at 253, discussing S. Rep. No. 99-345, at 26
(Dec. 27, 2013); OIG Advisory Op. No. 12-20, HHS, 2012 WL 7148096 (Dec.
12, 2012); OIG Advisory Op. No. 12-10, HHS, 2012 WL 4753657 (Aug. 23,
2012); OIG Compliance Program Guidance for Pharmaceutical Manufac-
turers, HHS Notice, 68 Fed. Reg. 23,731 (May 5, 2003); OIG Advisory Op.
No. 00-10, HHS, 2000 WL 35747420 (Dec. 15, 2000); Publication of OIG
Special Fraud Alerts, HHS Notice, 59 Fed. Reg. 65,372 (Dec. 19, 1994);
Medicare and State Health Care Programs, HHS Final Rule, 56 Fed. Reg.
35,952 (July 29, 1991).
No. 19-2273 31
(1986). If Congress wishes to require some extra-constitu-
tional minimum of fairness, reasonableness, or adequacy of
the government’s decision under § 3730(c)(2)(A), it will need
to say so. See § 3730(c)(2)(B).
Two final matters relating to § 3730(c)(3). First, because we
have construed the government’s motion to dismiss as a mo-
tion to intervene and dismiss for both jurisdictional and mer-
its purposes, it might be thought proper to remand the case
for the district court to consider the government’s “good
cause” to intervene under § 3730(c)(3). We see no need for a
further hearing here because the proper outcome is clear. In
light of the government’s unrestricted substantive right under
Rule 41(a) and the absence of countervailing factors, such as
fairness to the relator or conservation of judicial resources
(likely not factors in any case at an early enough stage for Rule
41(a)(1)(A)(i) to apply), we see no basis for denying interven-
tion here. A denial would be an abuse of discretion, so we
need not remand for that purpose. United States v. Ford, 627
F.2d 807, 811 (7th Cir. 1980).
Second, because § 3730(c)(3) instructs the district court not
to “limit[] the status and rights” of the relator when permit-
ting the government to intervene, it might be argued that
§ 3730(c)(1) and (2) do not apply when the government inter-
venes under § 3730(c)(3). Presumably in such cases the gov-
ernment would be treated as an ordinary Rule 24(b) interve-
nor-plaintiff with the same rights as the original plaintiff. See
7C Charles Alan Wright, Arthur R. Miller, et al., Federal Prac-
tice and Procedure § 1920 (3d ed. 1998 & supp. 2019). But inter-
vention is already given to the government on basically iden-
tical terms under Rule 24(b)(2). There is no need to construe
§ 3730(c)(3) so that it would add nothing. We find it unlikely
32 No. 19-2273
that Congress meant to introduce a new configuration of the
government-relator relationship (that is, as co-equal plain-
tiffs) in an ancillary provision without otherwise providing
for its terms in § 3730(c). See Whitman v. American Trucking
Ass’ns, 531 U.S. 457, 468 (2001) (Congress does not hide “ele-
phants in mouseholes”). The better reading is that § 3730(c)(3)
instructs the district court not to limit the relator’s “status and
rights” as they are defined by §§ 3730(c)(1) and (2). Thus, the
government cannot gain an advantage by intervening after
the seal period; the relator cannot gain an advantage by en-
gaging in gamesmanship or delay during the seal period.
The decision of the district court is REVERSED and the
case is REMANDED with instructions to enter judgment for
the defendants on the relator’s claims under the False Claims
Act, dismissing those claims with prejudice as to the relator
and without prejudice as to the government.
No. 19-2273 33
Appendix: 31 U.S.C. § 3730(b)–(c)
(b) Actions by Private Persons.—(1) A person may bring a
civil action for a violation of section 3729 for the person and
for the United States Government. The action shall be brought
in the name of the Government. The action may be dismissed
only if the court and the Attorney General give written con-
sent to the dismissal and their reasons for consenting.
(2) A copy of the complaint and written disclosure of sub-
stantially all material evidence and information the person
possesses shall be served on the Government pursuant to
Rule 4(d)(4) of the Federal Rules of Civil Procedure. The com-
plaint shall be filed in camera, shall remain under seal for at
least 60 days, and shall not be served on the defendant until
the court so orders. The Government may elect to intervene
and proceed with the action within 60 days after it receives
both the complaint and the material evidence and infor-
mation.
(3) The Government may, for good cause shown, move the
court for extensions of the time during which the complaint
remains under seal under paragraph (2). Any such motions
may be supported by affidavits or other submissions in cam-
era. The defendant shall not be required to respond to any
complaint filed under this section until 20 days after the com-
plaint is unsealed and served upon the defendant pursuant to
Rule 4 of the Federal Rules of Civil Procedure.
(4) Before the expiration of the 60-day period or any exten-
sions obtained under paragraph (3), the Government shall—
(A) proceed with the action, in which case the action shall
be conducted by the Government; or
34 No. 19-2273
(B) notify the court that it declines to take over the action,
in which case the person bringing the action shall have the
right to conduct the action.
(5) When a person brings an action under this subsection,
no person other than the Government may intervene or bring
a related action based on the facts underlying the pending ac-
tion.
(c) Rights of the Parties to Qui Tam Actions.—(1) If the
Government proceeds with the action, it shall have the pri-
mary responsibility for prosecuting the action, and shall not
be bound by an act of the person bringing the action. Such
person 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 notwith-
standing the objections of the person initiating the action if
the person has been notified by the Government of the filing
of the motion and the court has provided the person with an
opportunity for a hearing on the motion.
(B) The Government may settle the action with the defend-
ant notwithstanding the objections of the person initiating the
action if the court determines, after a hearing, that the pro-
posed settlement is fair, adequate, and reasonable under all
the circumstances. Upon a showing of good cause, such hear-
ing may be held in camera.
(C) Upon a showing by the Government that unrestricted
participation during the course of the litigation by the person
initiating the action would interfere with or unduly delay the
Government’s prosecution of the case, or would be repeti-
tious, irrelevant, or for purposes of harassment, the court
No. 19-2273 35
may, in its discretion, impose limitations on the person’s par-
ticipation, such as—
(i) limiting the number of witnesses the person may call;
(ii) limiting the length of the testimony of such witnesses;
(iii) limiting the person’s cross-examination of witnesses;
or
(iv) otherwise limiting the participation by the person in
the litigation.
(D) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the person
initiating the action would be for purposes of harassment or
would cause the defendant undue burden or unnecessary ex-
pense, the court may limit the participation by the person in
the litigation.
(3) If the Government elects not to proceed with the action,
the person who initiated the action shall have the right to con-
duct the action. If the Government so requests, it shall be
served with copies of all pleadings filed in the action and shall
be supplied with copies of all deposition transcripts (at the
Government’s expense). When a person proceeds with the ac-
tion, the court, without limiting the status and rights of the
person initiating the action, may nevertheless permit the Gov-
ernment to intervene at a later date upon a showing of good
cause.
(4) Whether or not the Government proceeds with the ac-
tion, upon a showing by the Government that certain actions
of discovery by the person initiating the action would inter-
fere with the Government’s investigation or prosecution of a
criminal or civil matter arising out of the same facts, the court
36 No. 19-2273
may stay such discovery for a period of not more than 60
days. Such a showing shall be conducted in camera. The court
may extend the 60-day period upon a further showing in cam-
era that the Government has pursued the criminal or civil in-
vestigation or proceedings with reasonable diligence and any
proposed discovery in the civil action will interfere with the
ongoing criminal or civil investigation or proceedings.
(5) Notwithstanding subsection (b), the Government may
elect to pursue its claim through any alternate remedy availa-
ble to the Government, including any administrative proceed-
ing to determine a civil money penalty. If any such alternate
remedy is pursued in another proceeding, the person initiat-
ing the action shall have the same rights in such proceeding
as such person would have had if the action had continued
under this section. Any finding of fact or conclusion of law
made in such other proceeding that has become final shall be
conclusive on all parties to an action under this section. For
purposes of the preceding sentence, a finding or conclusion is
final if it has been finally determined on appeal to the appro-
priate court of the United States, if all time for filing such an
appeal with respect to the finding or conclusion has expired,
or if the finding or conclusion is not subject to judicial review.
No. 19-2273 37
SCUDDER, Circuit Judge, concurring in the judgment. I agree
with the majority’s analysis of the jurisdictional question and
bottom-line conclusion. But because I prefer to decide the
government’s challenge to the district court’s denial of its
motion to dismiss on narrower grounds, I concur in the
judgment.
The majority opinion rightly observes that Section
3730(c)(2)(A) of the False Claim Act is an odd provision. It is
strange to grant the government broad dismissal authority
but then condition any dismissal on the district court holding
a hearing (to allow a relator to voice objections) that leads to
no judicial review. The oddity of that outcome contributes to
the difficulty of landing on the right answer to the question of
statutory construction analyzed in depth in the majority
opinion.
What I am more confident saying is that this appeal does
not require us to answer the question. We can (and should)
resolve this case without deciding whether the D.C. Circuit
got it right in holding that Section 3730(c)(2)(A) confers
unfettered discretion upon the government to dismiss a qui
tam action or instead whether the Ninth Circuit has the better
end of the reasoning in requiring a dismissal decision to
survive rational basis review. Compare Swift v. United States,
318 F.3d 250 (D.C. Cir. 2003), with United States ex rel. Sequoia
Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139 (9th Cir.
1998). Even under the Ninth Circuit’s standard, the
government’s dismissal request easily satisfied rational basis
review, and the district court committed error concluding
otherwise. See FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 314–
15 (1993) (underscoring that the rational basis standard
requires “a paradigm of judicial restraint” and indeed ruling
38
No. 19-2273
out “every conceivable basis” otherwise supporting the
challenged measure).
I would stop there. While the majority opinion contains a
sophisticated discussion of whether principles of
constitutional avoidance should play any role in a question of
statutory interpretation under the False Claims Act, I would
rather confront that question in a case where the outcome
hinged on the answer. In my respectful view, the narrower
ground is the best ground to stand on to resolve this appeal.