David O’Neill is a third-year law student at The George Washington University Law School. He is a member of the Public Contract Law Journal and hopes to join the U.S. Army JAG Corps following graduation. Mr. O’Neill would like to thank Professor Allison Geewax for her help throughout the writing process. Mr. O’Neill can be reached at email@example.com.
A. The Standard for FCA Dismissals Is at Issue After the DoJ Advocated for More Dismissals in Early 2018 and Moved to Dismiss Several Qui Tam Actions in Early 2019
On January 10, 2018, Michael Granston, the Director of Commercial Litigation in the Fraud Section at the Department of Justice (DoJ), disseminated a memo to all attorneys in his section.1 This memo advocated for the government to move to dismiss some False Claims Act (FCA) qui tam actions for several reasons.2 Granston advised the DoJ that dismissals would help to minimize frivolous or parasitic suits, conserve government resources, and look out for the U.S. Government and contractor interests.3 He advocated for dismissals pursuant to 31 U.S.C. § 3730(c)(2)(A), a subsection of the FCA that allows the government to move to dismiss relators’ actions when deciding whether to intervene in their actions.4 The DoJ has rarely dismissed qui tam actions pursuant to 31 U.S.C. § 3730(c)(2)(A),5 but the memo advocated for more use of the dismissal power to save government resources, dismiss frivolous actions, and solve DoJ capacity issues going forward.6 On February 28, 2018, Deputy Associate Attorney General Stephen Cox echoed Granston’s message, stating,
Ultimately, it is in the interests of everyone — including the Federal Government and, importantly qui tam relators — for the United States to exercise its dismissal authority in appropriate cases. When we don’t exercise the dismissal authority in non-meritorious qui tam cases, this not only imposes obvious costs on defendants, but it results in substantial costs that the government must bear to monitor the enormous docket of declined qui tam cases and the costs incurred when an agency gets dragged into those cases through discovery.7
On another front, in 2017, the Ninth Circuit reversed a government motion to dismiss in United States ex rel. Campie v. Gilead Sciences, Inc., a case in which a relator claimed that a pharmaceutical company made false statements about its HIV medication’s compliance with Food and Drug Administration (FDA) regulations resulting in receiving billions of dollars in government funding.8 The government moved for dismissal, at the pleadings stage, alleging that continuing the case would be contrary to the United States’ interest.9 Following the Ninth Circuit’s decision, the Supreme Court requested the solicitor general’s opinion on whether to grant certiorari in the case.10 In a surprising decision, the DoJ asked the Court not to grant certiorari for the case and stated that it would seek dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A) if the Court remanded the case to the district court for further proceedings.11
In the latest development, Director Granston revealed on June 24, 2019, that the DoJ moved to dismiss at least thirty qui tam actions since he wrote his memo in early 2018.12 He elaborated, “That is a much larger number than in the past, but it is also a fraction of the [whistleblower] cases that were filed in the same period of time.”13 This increase in government motions for the dismissal of qui tam actions mirrors Granston’s guidance from the memo.14
B. Circuits Are Split About Whether the Government Is Required to Provide a Valid Governmental Purpose When Moving to Dismiss Qui Tam Actions
The FCA is the government’s most important tool for combatting civil fraud today. In 2017, the government recovered $3.7 billion from FCA actions,15 with nearly $3.4 billion recovered from qui tam actions brought by relators.16 Relators filed 674 qui tam actions and earned $392 million from settlements and damages.17 Both the government and relators have financial incentives with qui tam actions, but not all qui tam actions filed are meritorious.18 To manage non-meritorious qui tam actions, the government has several options including declining to intervene in a relator’s action, and occasionally using 31 U.S.C. § 3730(c)(2)(A) to move to dismiss the relator’s action after deciding not to intervene.19 Dismissing a relator’s qui tam action ends the government’s obligation to monitor the action and can decrease litigation expenses for the government.20 Because conserving government resources and litigation costs is a goal of dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A), these dismissals are a valuable tool only if they can be executed efficiently without requiring significant additional litigation in themselves.21 Further, the government can only conserve resources and achieve its goals when given broad discretion to dismiss non-meritorious qui tam actions. Currently, circuits are split about how much discretion the government should have when moving to dismiss actions after declining intervention.22 The Ninth and Tenth Circuits have required the government to provide a valid governmental purpose and a rational relationship between dismissal and the governmental purpose to dismiss the qui tam action before the burden of proof shifts to the relator.23 The D.C. Circuit gave the government broad discretion to dismiss qui tam actions and did not require the government to offer a governmental interest in moving to dismiss the action.24
C. The FCA Should Be Amended to Give the Government Unfettered Discretion to Dismiss Non-Intervened Qui Tam Actions Consistent with the D.C. Circuit’s Approach
In the case of the government moving to dismiss qui tam actions, Congress should amend 31 U.S.C § 3730(c)(2)(A) to give the government “unfettered discretion” when moving to dismiss relators’ actions consistent with the D.C. Circuit’s analysis. The government should not be required to state a governmental purpose and rational relation between that purpose and dismissal because this will waste further litigation and government resources while litigating the merits and reasonableness of dismissal. The government should also have broad discretion to dismiss frivolous qui tam actions as part of its role as a regulator of civil fraud lawsuits. Dismissing frivolous actions can protect contractors from litigation costs and reputational damage. An amendment to the FCA would provide unambiguous guidance for both the relator and the government for the resolution of qui tam actions. An amendment is preferential to a Supreme Court ruling resolving the circuit split in favor of the D.C. Circuit’s analysis because it would likely take less time to be implemented and require fewer government resources as the case moved through the appellate courts.
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