DOJ Memo Spurs Speculation Over Future of Whistleblower Cases

Should a recent internal memo from the U.S. Department of Justice on the dismissal of qui tam cases serve as a bellwether for the healthcare industry, or is it just a re-statement of existing policy issued in light of the increasing number of such cases being filed.

That’s the question being asked by many attorneys on both sides of the aisle, following the release of the memo written by Michael D. Granston, director of the  Commercial Litigation Branch of the Fraud Section, and made public late last month.

In it, Granston outlines various factors government prosecutors should use to evaluate whether a False Claims Act (FCA) case filed by a whistleblower should be dismissed.

Under the FCA, a private citizen with firsthand knowledge of alleged fraud can file a qui tam, or whistleblower lawsuit, on behalf of the government. The government then has to decide whether to intervene and take over the case, or decline, in which case the whistleblower may move forward on their own.

However, when declining to intervene, government attorneys also can, by law, seek dismissal. The DOJ’s Granston noted that typically the government hasn’t sought dismissal “to avoid precluding relators from pursuing potentially worthwhile matters, and to ensure that dismissal is utilized only where truly warranted.”

However, the increasing number of qui tam cases filed, (as many as 600 or more per year according to Granston), coupled with a static rate of government intervention, appears to have prompted the memo.

“Even in non-intervened cases, the government expends significant resources in monitoring these cases and sometimes must produce discovery or otherwise participate,”Granston writes. “If the cases lack substantial merit, they can generate adverse decisions that affect the government’s ability to enforce the FCA.”

The government isn’t the only one expending resources. Defendants also must spend a great deal of time, money and resources to defend themselves from what could conceivably be a frivolous or meritless case.

The memo outlines seven factors and includes several case examples that government prosecutors can use to determine whether to seek dismissal:

Curbing Meritless Qui Tams – if a complaint is facially lacking in merit, either because the relator’s legal theory is defective or factual allegations are frivolous.

Preventing Parasitic or Opportunistic Qui Tam Actions – if a complaint duplicates a pre-existing government investigation and adds no useful information to the investigation.

Preventing Interference with Agency Policies and Programs – if an agency determines that a qui tam action threatens to interfere with its policies or the administration of its programs and has recommended dismissal to avoid these effects.

Controlling Litigation Brought on Behalf of the United States – to protect the department’s litigation prerogatives.

Safeguarding Classified Information and National Security Interests – such instances would relate less to healthcare and more to those involving, for example, military contracting or intelligence agencies.

Preserving Government Resources – if the government’s costs are likely to exceed any expected gain.

Addressing Egregious Procedural Errors – if there are problems with the relator’s action that frustrate the government’s efforts to conduct a proper investigation.

The memo advises that attorneys planning to either decline to intervene or recommend dismissal should, “to the extent possible, advise relators of perceived deficiencies in their cases so they can make an informed decision whether to proceed.”

Granston points out that in many cases relators may choose to voluntarily dismiss their actions, particularly if the government doesn’t plan to become involved. It points out that since Jan. 1, 2012, more than 700 qui tam actions were dismissed by relators after the government elected not to intervene.

The list, says Granston, isn’t meant to be exhaustive and “there may be other reasons for concluding that the government’s interest are best served by the dismissal of a qui tam action. He also notes that attorneys do not have to “proceed in an all or nothing manner” and that in certain cases, it may be appropriate to dismiss some defendants or claims and move forward with the remainder.

Whether this memo portends a policy change or is simply a reminder for government attorneys to exercise their legal right to dismiss, remains to be seen.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as our ability to defend those who are the target of a whistleblower action. Contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.