Alerts and Updates

Nearly all of the items mentioned in the new guidance appear to be repackaging of well-established practices in the qui tam realm. Nevertheless, defendants and relators alike must be sensitive to the sentiment of the new guidance—if nothing else, it provides a more defined basis for government dismissal.

On January 25, 2018, the U.S. Department of Justice announced what it suggested was a new policy directing federal prosecutors handling False Claims Act litigation to move aggressively to dismiss qui tam complaints that threaten government interests. This new guidance may have important implications for both relators and defendants, although its actual impact remains to be seen.

The DOJ’s recently released memorandum offers a list of “non-exhaustive” bases for government motions to dismiss qui tam complaints. These include the government’s interest in: (1) “curbing meritless qui tams”; (2) “preventing parasitic or opportunistic qui tam actions”; (3) “preventing interference with agency policies and programs”; (4) “controlling litigation brought on behalf of the United States”; (5) “safeguarding classified information and national security interests”; (6) “preserving government resources”; and (7) “addressing egregious procedural errors.” These “factors,” although facially distinct from one another, appear to be variations on a common directive: Where prosecutors can articulate a threat to a federal interest by an ongoing qui tam litigation, they should not just decline to intervene, but actively seek to dismiss the complaint. Moreover, the memorandum also advised that prosecutors should assert the seven listed grounds in the alternative and, where appropriate, in conjunction with other recognized grounds for the dismissal of FCA complaints, such as the “first to file bar, the public disclosure bar, the tax bar, the bar on pro se relators, or Federal Rule of Civil Procedure 9(b).”

Nearly all of the items mentioned in the new guidance appear to be repackaging of well-established practices in the qui tam realm. That the government moves to dismiss facially deficient complaints or those with “egregious” procedural defects should not come as any great surprise. Nevertheless, defendants and relators alike must be sensitive to the sentiment of the new guidance—if nothing else, it provides a more defined basis for government dismissal.

For defendants and their counsel, the memorandum promises an easier path to dismissal when they are alert to the possibility of a qui tam complaint. The memorandum accomplishes this by establishing a clear, if discretionary, set of justifications for dismissal that can be cited in negotiations with government prosecutors. Where a putative defendant has forewarning of a complaint (i.e., it receives a civil investigative demand or subpoena), it might do well to focus its internal investigation on one or more of the seven factors justifying a government dismissal. That way, it might offer government lawyers a well-developed—and prepackaged—rationale for terminating the qui tam litigation.

Although the recently released memorandum suggests a new, strongly pro-defendant attitude from federal prosecutors, its actual impact on litigation is far from certain. The new guidance is precisely that—guidance. How different federal prosecutors in U.S. Attorney’s Offices around the country interpret, and execute, the memorandum remains an open question of significant interest to companies that do business with the government, whistleblowers and counsel to each.