'Mixed Messages': DOJ Efforts to Dismiss Qui Tam Actions

Qui tam actions brought by relators account for the vast majority of FCA actions. Of the $59 billion recovered by the government since 1986, $42.5 billion of that was recovered in qui tam actions. See, DOJ Fraud Statistics 2018. The number of qui tam actions filed annually has increased 20 fold since the 1986 amendment that increased awards to relators. See, DOJ Fraud Statistics 2018.

Guidance from the Granston Memo

Despite the historical trend of reduced government involvement in qui tam actions, the government is sending "mixed messages" regarding its view of FCA relators. On Jan. 10, 2018, the DOJ issued a memo "intended to provide a general framework for evaluating when to seek dismissal under section 3730(c)(2)(A) and to ensure a consistent approach to this issue across the Department." Memorandum from Michael D. Granston, Director, Commercial Litigation Branch, Fraud Section, to Attorneys, Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorneys Handling False Claims Act Cases (Jan. 10, 2018) (hereinafter Granston Memo).

The Granston Memo lists seven non-exhaustive factors that the DOJ can rely on for dismissal. According to the Granston Memo, the DOJ may seek to dismiss: 1) a qui tam complaint that is facially lacking in merit; 2) a qui tam action that duplicates a pre-existing government investigation; 3) a qui tam action that threatens to interfere with an agency's policies or administration of its programs; 4) when necessary to protect the DOJ's "litigation prerogatives"; 5) when necessary to safeguard classified information such as an action involving an intelligence agency or military procurement contract; 6) when the government's expected costs are likely to exceed any expected gains; and 7) when problems with the relator's action frustrate the government efforts to conduct a proper investigation. See, Granston Memo. Following the incorporation of the Granston Memo in the DOJ Justice Manual at Section 4-4.111, the DOJ pushed to increase dismissals pursuant to section 3730(c)(2)(A). While these factors are not surprising, the Granston Memo formally announced the start of a more restrictive approach to qui tam actions.

Dispute over the Statute of Limitations

Although signs point toward increased efforts to restrict qui tam actions, the United States supported an expansive view of the statute of limitations for relators in Cochise Consultancy, Inc. v. United States ex rel. Hunt, 139 S. Ct. 1507 (2019). Cochise Consultancy addressed the limitations period in qui tam actions in which the government declined to intervene. One issue was whether the relator constituted "the official of the United States" whose knowledge triggers the Section 3731(b)(2) three year limitations period. The three year limitations period begins to run after "the date when facts material to the right of action are known or reasonably should have been known by the official of the United States." 31 USCS §3730(b)(2).