Legal Insights

By: Lindsay Simmons

Two recently-issued Department of Justice (DOJ) memoranda spell significant changes in the enforcement – that is, lighter enforcement – of the False Claims Act (FCA). Specifically,

• First, on January 10, 2018, DOJ issued an internal memorandum encouraging all U.S. Attorneys’ offices to dismiss frivolous FCA qui tam lawsuits.
   
• This memo lists seven factors for U.S. Attorneys to consider in deciding whether to dismiss a qui tam lawsuit and is aimed at changing DOJ’s historic reluctance to dismiss such claims:

1. 1. To curb meritless qui tam actions –Dismissal should be considered where a “relator’s legal theory is inherently defective, or relator’s factual allegations are frivolous,” or where the government “conclude[s] after completing its investigation of relator’s allegations that the case lacks merit.”
   2. To prevent duplicative qui tam actions – Dismissal should be considered where a qui tam action “duplicates a pre-existing government investigation and adds no useful information to the investigation” in order to prevent relators from “receiv[ing] an unwarranted windfall at the expense of the public fisc.”
   3. To prevent interference with agency policies and programs – For example, dismissal of a qui tam action is appropriate where ongoing litigation would delay clean-up and closure of a contaminated government facility.
   4. To protect DOJ’s control of litigation – Dismissal of qui tam actions is appropriate to avoid the risk of unfavorable precedent or conflicts with similar claims in parallel litigation.
   5. To protect national security interests – For example, dismissal of a qui tam action is appropriate where the adjudication of a claim poses a risk that classified information might be disclosed.
   6. To preserve government resources –Dismissal should be considered “when the government’s expected costs are likely to exceed any expected gain.”
   7. To address procedural errors –Dismissal should be considered where procedural problems with the relator’s action “frustrate the government’s efforts to conduct a proper investigation.”

• Second, on January 25, 2018, the Associate Attorney General issued a memorandum confirming that: (1) agency “guidance documents” are not legally binding except to the extent they repeat obligations that exist in statutes or regulations; and (2) DOJ cannot use noncompliance with such “guidance documents” as a basis for establishing violations in civil enforcement actions.
   
• This memo is intended to prevent government attorneys from creating de facto regulations since, as DOJ acknowledges, DOJ and other agency attorneys have been “blur[ing] the distinction between regulations and guidance documents.” The memo states that DOJ “should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation” and that “agency guidance documents cannot create any additional legal obligations.” The memo applies to all future DOJ civil enforcement actions, “as well as (wherever practicable) those matters pending as of” January 25, 2018.

These two recent DOJ memoranda provide defendants with opportunities to seek dismissal of the claims filed against them: (i) claims that are based solely on violations of non-statutory or non-regulatory agency guidance are now, by definition, meritless and frivolous; and (ii) DOJ’s willingness to step in and exercise its authority to dismiss frivolous or otherwise problematic qui tam actions.

Lindsay Simmons is responsible for the contents of this Article.
© 2018 Jackson Kelly PLLC