QUESTION: I saw in last week’s HLE’s Government at Work that the Department of Justice (“DOJ”) has recently issued a memorandum that discusses the dismissal of a qui tam case. Can the government really do that? Can you provide more information?
ANSWER: Yes, the DOJ has the authority to dismiss a qui tam over the objection of the qui tam relator. On January 10, 2018, the Director of the DOJ’s Commercial Litigation Branch, Fraud Section, issued a Memorandum to the attorneys in that branch of the DOJ entitled “Factors for Evaluating Dismissal Pursuant to 31 U.S.C. 3730(c)(2)(A)” that discusses when it is appropriate for DOJ attorneys to exercise this authority.
In this Memo, the DOJ recognized that while the number of qui tam cases that have been filed over the past several years has exceeded 600 new cases per year, the number of cases in which the DOJ has intervened has remained relatively the same. The Memo notes that even in cases in which the DOJ declines to intervene, the DOJ expends considerable resources monitoring the case and in some instances must produce discovery or otherwise participate. The DOJ is also concerned that qui tam cases that lack merit can generate adverse precedent which could hamstring the DOJ’s ability to enforce the False Claims Act.
Therefore, DOJ attorneys have been advised not only to determine whether to intervene in a qui tam case, but to go a step further and, if certain factors are present, to seek the dismissal of the qui tam claim under 31 U.S.C. §3730(c)(2)(A).
The Memo notes that, historically, the DOJ has seldom invoked this authority. It also advised DOJ attorneys to be judicious in exercising this authority. However, the Memo then outlines the factors that the DOJ should consider when deciding whether to dismiss a qui tam claim. Those factors include qui tam claims that: are meritless; duplicate pre-existing government investigations; threaten to interfere with agency policy or the administration of its programs; threaten the DOJ’s litigation prerogatives; involve intelligence agencies or military procurement; cause the government’s costs to exceed the expected recovery; or frustrate the government’s efforts to conduct a proper investigation.
The Memo states that the DOJ should consult closely with the affected agency as to whether dismissal is appropriate, advise the relator of the prospect of dismissal, and give the relator the opportunity to voluntarily dismiss the action. However, if the qui tam relator does not voluntarily dismiss the action, then if any of the factors described in the Memo exist, the DOJ is to exercise its authority to dismiss the qui tam claim, which should be filed at or near the time that the DOJ declines to intervene in the qui tam case.
Click here if you want to see the entire Memo or, if you prefer, please join HortySpringer partners Henry Casale and Dan Mulholland who will be discussing this Memo and other late-breaking fraud and abuse and compliance developments at our Physician-Hospital Contracts Clinic in Austin on March 1-3, 2018. Click here to learn more about it and register.