Michael Granston, the Director of the Commercial Litigation Branch within the United States Department of Justice's Fraud Section, recently issued an internal memorandum affirming his prior statements that the Department of Justice (DOJ) should consider seeking dismissal of meritless False Claims Act (FCA) suits brought by relators in qui tam cases. Under 31 U.S.C. § 3730(c)(2)(A), the government can dismiss a qui tam action "notwithstanding the objections of the person initiating the action" by filing a motion with the court and provided the relator has had an opportunity to be heard. Historically, this authority has been used sparingly.
Last year, in a surprise announcement at a health care compliance conference, Granston indicated that the DOJ may seek to dismiss qui tam actions brought by FCA relators when it determines the actions lack merit. Following industry speculation that his statements reflected a policy shift by the DOJ, the DOJ disagreed and suggested Granston's comments were simply a recitation of the status quo and description of the DOJ's existing power to seek dismissal of unmeritorious FCA suits. The new DOJ memorandum, however, builds on Granston's conference statements and could signal a more aggressive stance toward dismissal of unmeritorious whistleblower actions. At a minimum, it provides increased ammunition to defense counsel to request the DOJ seek dismissal of such actions.
The Granston Memorandum provides seven non-exhaustive factors that DOJ lawyers should consider when deciding whether to seek dismissal of all or part of a FCA qui tam suit under section 3730(c)(2)(A). Specifically, these factors can be categorized as follows:
- Curbing meritless qui tams. The memorandum directs recipients to consider moving to dismiss qui tam actions that are legally or factually without merit. This includes those actions found to be meritless through the government's investigation efforts.
- Preventing parasitic or opportunistic qui tam actions and controlling litigation. The memorandum recommends the DOJ consider moving to dismiss actions that duplicate a pre-existing government investigation and do not provide new information to the government. Similarly, the memorandum instructs the DOJ to consider dismissing cases to protect the government's prerogatives in pending litigation.
- Preventing interference with agency policies and programs. The memorandum suggests the DOJ should consider moving to dismiss actions that could interfere with an agency's policies or the administration of the agency's programs.
- Certain procedural and policy concerns. These include safeguarding classified information and national security interests, preserving government resources, and addressing procedural errors.
The memorandum acknowledged that dismissal under section 3730(c)(2)(A) is not the government's only avenue to dismiss problematic FCA qui tam actions. Such actions may be subject to alternative grounds for dismissal, including the first to file bar, public disclosure bar, tax bar, bar on pro se relators, and Federal Rule of Civil Procedure 9(b). The memorandum also explains that it may be appropriate for the government to seek dismissal of all or part of an FCA qui tam action under any combination of these grounds, in addition to the factors supporting a motion under section 3730(c)(2)(A).
If the memorandum is a recitation of existing policy, it is a policy that has been used sparingly; in our experience, DOJ rarely moves to dismiss non-intervened cases. But even if the memorandum does not reflect a direct change in policy, it provides a tool for defense counsel seeking relief for clients from meritless qui tam actions. A defendant who is able to make a strong argument why one or more of the seven factors enumerated in the memorandum applies to a particular case may be able to convince the government to dismiss that action if it decides not to intervene. These dismissal arguments may become particularly persuasive if defense counsel can convince DOJ that the relator's allegations do not meet the heightened materiality standards articulated last year in Escobar. Because the memorandum suggests the government should consider moving to dismiss actions at or near the time it declines to intervene in such actions, it would be prudent for a defendant to consider these issues, and potential arguments supporting dismissal, early and to present those factors supporting dismissal under section 3730(c)(2)(A) to the government during its defense of a government investigation on the merits. And if the government does not agree to move to dismiss a meritless case at the time it declines to intervene, defense counsel should push the DOJ to dismiss the relator's suit if the relator is unable to obtain additional support for their claims by fixed date, as the memorandum specifically supports such action.
The Granston memorandum dated January 10, 2018 can be viewed here.
This article is presented for informational purposes only and is not intended to constitute legal advice.