The Department of Justice (DOJ) recently and unexpectedly announced it will move to dismiss cases brought under the False Claims Act (FCA) if the DOJ deems the case to be “unmeritorious.” The Director of the Civil Fraud Section of the DOJ, Michael Granston, announced the decision recently during a speech at the Health Care Enforcement Compliance Institute in Washington, D.C. Director Granston did not specify how the DOJ would determine whether a case lacks merit or what the DOJ would consider in making such a determination.
The False Claims Act allows whistleblowers (relators) to bring a qui tam lawsuit “in the name of the Government.” If their qui tam case is successful, the relator may claim an award varying 15-30 percent. Because the action is brought in the name of the Government, the Government can decide to intervene in the action to assume the primary role in litigating the case or not to intervene. Where the Government decides not to intervene, the relator can litigate the case without the Government.
The decision to intervene depends on various factors other than just the merits of the relator’s claims, such as conducting a cost-benefit analysis to determine whether the litigation costs are worth the benefit the Government obtains from the action.
The False Claims Act provides the Government with the authority to move to dismiss actions brought pursuant to the False Claims Act. Although the Government has always possessed this authority, the DOJ has sparingly moved to dismiss qui tam actions and, in the vast majority of cases, allows relators to proceed with their cases without filing a motion to dismiss.
The DOJ’s recent announcement raises various concerns and questions, because Director Granston did not clarify whether the decision to intervene and the decision to dismiss are intertwined. In other words, it is unclear whether or not the DOJ will move to dismiss each time it declines to intervene in a qui tam case. The DOJ moving to dismiss each time it declines to intervene in a case would have a significant negative impact on the ability to prosecute fraud against the government and taxpayers. As we have consistently reported, many relators in past cases have recouped huge sums of money on behalf of the Government under the False Claims Act without the Government intervening to prosecute the case.
However, if the DOJ does not move to dismiss each time it declines to intervene, relators could argue the Government’s decision not to file a motion to dismiss signifies that the case is meritorious, but the Government declined to intervene for other reasons. Such an argument could benefit relators where the Government declines to intervene, because recent Third and Fourth Circuit Court of Appeals cases give weight to the government’s decision to intervene in determining whether false certifications were material to the government’s decision to pay the claims. In other words, those courts deem the Government declining to intervene suggests the false certifications were not material to payment and vice versa.
In cases where the DOJ does not move to dismiss even though they decline to intervene, it would appear that the DOJ deems a Realtor’s case meritorious. Therefore, the false certifications would be said to be material to payment because the relator’s allegations about materiality were in fact meritorious. Ultimately, the impact of the DOJ’s announcement and whether the government will move to dismiss qui tam claims more often than it has in the past (which was rare) remains to be seen.
Lawyers at Beasley Allen continue to vigorously investigate fraud against both the federal and state governments and encourages anyone who knows of fraudulent activities to step forward. Potential whistleblowers have the right to not be retaliated against for doing the right thing and reporting the fraud they have witnessed. Anyone considering doing the right thing and blowing the whistle is strongly urged to seek legal advice before doing so. Lawyers at Beasley Allen are very familiar with the federal False Claims Act and its state counterparts and can guide whistleblowers through the process. If you need more information about the recent DOJ action, contact Andrew Brashier or Paul Evans, lawyers in our firm, at 800-898-2034 or by email at Andrew.Brashier@beasleyallen.com or Paul.Evans@beasleyallen.com.
Sources: 31 U.S.C. § 3730, www.natlawreview.com
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.