Change in Policy or Same Old Story? DOJ Suggests it Will Dismiss Unmeritorious Qui Tam Suits
An early report from the Health Care Compliance Association’s Health Care Enforcement Compliance Institute states that DOJ will be moving to dismiss False Claims Act cases that it concludes lack merit. DOJ has not yet posted the speech on its website but RACmonitor, an online news and information source for healthcare providers, reports that:
In announcing a significant policy change, the U.S. Department of Justice (DOJ) said that when it concludes that a qui tam case lacks merit, it will file a motion to dismiss the case rather than allowing the relator to continue.
The surprise announcement was made by Michael Granston, director of the commercial litigation branch of the fraud section in the DOJ’s civil division, during the Health Care Compliance Association’s Health Care Enforcement Compliance Institute in Washington, D.C. on Monday.
While it certainly would be welcome if the government exercised its long held statutory power to dismiss FCA cases, 31 U.S.C. § 3730(c)(2)(A), this announcement raises more questions than it answers. For example, it is not clear that this is a policy change at all. DOJ has always had the ability to move to dismiss cases. But it has done so only rarely. United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998); Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003). If this is a true policy change, then we would expect the government would more frequently exercise its dismissal power. But Mr. Granston’s statement, as reported (the speech is not posted on the DOJ website), does not indicate whether the government will more frequentlydismiss qui tam suits, only that it will do so when it concludes a case lacks merit. This, in our view, is consistent with current policy and therefore leaves us wondering whether this is a “policy change” at all.
It is also unclear how the government will conclude that a case lacks merit versus deciding to not intervene due to other factors, such as whether the cost of pursuing an action is worth the benefit that would result from a successful outcome. See United States ex rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 455 (5th Cir. 2005) (acknowledging that the government’s decision to intervene in a case can be due to a variety of factors, such as “a cost benefit analysis.”). Given its broad authority to dismiss cases, making such decisions without any particular standards or procedures is troublesome and raises Constitutional concerns due to usurpation of the judicial power.
This policy, if it is a policy that is actively applied, could also have far-reaching implications on both motions to dismiss and dispositive motions involving materiality argument. As to motions to dismiss, we would expect qui tam relators to argue in non-intervened cases in which the DOJ has not moved to dismiss that DOJ has concluded there is merit to the litigation (but elected to not intervene for other reasons). While we hope that Courts will not fall for this, recent decisions involving materiality suggest courts are giving more weight to the government’s intervention decision. United States ex rel. Petratos v. Genentech, Inc., 855 F.3d 481, 490 (3d Cir. 2017) (government’s decision not to intervene suggested the alleged false certification was not material to the government’s decision to pay claims); United States ex rel. Badr v. Triple Canopy, Inc., 857 F.3d 174, 179 (4th Cir. 2017) (government’s decision to “immediately intervene” suggested the alleged false certification was material to the government’s decision to pay claims).
Finally, it will be interesting to see if there is any uptick in motions to dismiss filed by DOJ in the coming year. Although the Las Vegas bookmakers have, oddly, yet to post any odds that there will be more motions to dismiss filed by the government, we believe that there will be no statistically significant uptick.