Since Congress strengthened the False Claims Act (FCA) in 1986, the number of FCA lawsuits filed by relators has increased dramatically. There were 669 of these qui tam lawsuits filed in FY2017—averaging a remarkable 12 new cases or more each week. While DOJ historically declines to intervene in most qui tam lawsuits, it rarely seeks dismissal at or near the same time it files for non-intervention, even though it has statutory authority to do so (31 U.S.C. § 3730(c)(2)(A)). This means that, assuming relators pursue the case after DOJ declines to intervene, government contractors that are party to the suit are left facing significant costs in defending the case. Government contractors may incur steep defense costs even if successful on their own motions to dismiss. This month, a U.S. Department of Justice (DOJ or "Department") internal memorandum was leaked that could prove to change that dynamic.

DOJ's memo encourages Department attorneys to consider using its statutory authority to seek dismissal of FCA qui tam actions in which it declines to intervene. This is the first time DOJ has issued guidance encouraging Department attorneys to undertake this analysis when declining to intervene, and could result in DOJ dismissing more FCA cases. The memo says that some of the cases in which DOJ has declined to intervene have actually become a burden on the government, setting bad precedent and still depleting valuable DOJ resources in monitoring the claims and complying with discovery requests. DOJ's memo lists government interests Department attorneys should consider when deciding whether to file a motion to dismiss under § 3730(c)(2)(A): (1) curbing meritless claims; (2) preventing parasitic or opportunistic qui tam claims that piggyback off of preexisting government investigations; (3) preventing interference with agency policies and programs; (4) controlling litigation brought on behalf of the government; (5) safeguarding classified information and national security interests; (6) preserving government resources; and (7) addressing egregious procedural errors. This guidance appears to be consistent with complaints we have heard from agency counsel that certain qui tam cases threaten to override federal agency compliance and regulatory priorities, to the detriment of the agency's mission. DOJ states it will begin collecting and tracking information on the number of qui tam complaints dismissed upon DOJ's motion so that the Department can ensure consistency. If this reporting becomes public, it will show whether DOJ's memo is actually resulting in increased dismissals upon DOJ motions.

DOJ's memo signals a potential sea change in the way DOJ handles qui tam actions. If adhered to by DOJ attorneys, the document could usher in a more difficult path forward for FCA relators, and with it, a welcome reprieve for government contractors. Only time will tell.