In a motion filed in the US District Court for the Eastern District of Texas in late 2018, the US Department of Justice (DOJ) sought to dismiss 11 False Claims Act (FCA), 31 U.S.C. § 3729(a), kickback complaints brought in various district courts across the country by the National Healthcare Analysis Group (NHCA). Health Choice Grp., LLC v. Bayer Corp., No. 5:17-CV-126-RWS-CMC, (E.D. Tex. Dec. 17, 2018). This motion followed on the heels of DOJ’s announcement to seek dismissal of the FCA suit in United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017), petition for cert. filed, (U.S. Jan. 3, 2018) (No. 17-936).

DOJ's actions suggest that the rationale of the previously issued "Granston Memo" is now being put into action. The Granston Memo, issued on January 10, 2018, encourages prosecutors to seek dismissal of FCA cases pursuant to 31 U.S.C. § 3730(c)(2)(A), where those cases "lack substantial merit" in order to, among other things, "advance the government's interests, preserve limited resources, and avoid adverse precedent."

In its amicus brief before the US Supreme Court in Gilead, DOJ stated it intended to move to dismiss the suit under § 3730(c)(2)(A), citing its "thorough investigation of [the whistleblowers'] allegations and the merits thereof," as well as the potential for "burdensome discovery" on the Food and Drug Administration, should the suit proceed past the pleading stage. Although the brief does not elaborate more on DOJ's rationale for potentially seeking dismissal, the cited reasons suggest that DOJ is now committed to following the Granston Memo’s policy of seeking dismissal to avoid adverse precedent and preserve resources.

The Gilead case is particularly significant because it presented the Supreme Court with the opportunity to clarify its decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which addressed whether a company's regulatory violations are material to government reimbursement decisions regarding that company's drugs or devices, and whether the government's prior knowledge of those regulatory violations renders them immaterial. The US Court of Appeals for the Ninth Circuit applied Escobar to hold that the government's continued payments did not render the violations immaterial. The Escobar inquiry turned on whether the government had "actual knowledge" of those violations, as opposed to allegations of violations, at the time of payment. United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 907 (9th Cir. 2017). In its amicus brief, DOJ sided with the Ninth Circuit and the whistleblowers, arguing that the relators had sufficiently pled materiality. Given the favorable nature of the Ninth Circuit's decision to future FCA complaints, DOJ's plan for dismissal may also be motivated by the desire to avoid reversal of that decision and the creation of "adverse precedent" per the Granston Memo.

While Gilead is the most high profile case where DOJ appears to be enacting the vision of the Granston Memo, the more recent decision to move for dismissal of 11 FCA complaints filed by the NHCA also suggests the memo is becoming more influential. DOJ argued in its motion that "the government [would] incur substantial costs in monitoring the litigation and responding to discovery requests," and that such "further expenditure of government resources is not justified." United States' Motion to Dismiss, Bayer, No. 5:17-CV-126-RWS-CMC, (E.D. Tex. Dec. 18, 2018).

It will be interesting to see whether courts generally agree with the positions taken by DOJ in the Granston Memo regarding their ability to dismiss cases based on a desire to avoid costly discovery. Both the Supreme Court in Gilead and the district court in Bayer have yet to rule on DOJ's motions. What is clear is that DOJ does not appear to be shy about seeking dismissal of costly or disadvantageous FCA claims, or cases that may create adverse precedent for prosecutors going forward. It remains to be seen what types of FCA litigation the government will be willing to incur substantial litigation costs moving forward. The Granston Memo thus has the potential to become a tool for defendants to make the case to prosecutors for dismissal in cases where the prospect of substantial discovery on the issue of the government's knowledge of regulatory violations looms large.