DOJ Memo Signals Qui Tam Sea Change

Publication

In a column for the Los Angeles Daily Journal,  Brian Hennigan and Padraic Foran weigh in on the U.S. Department of Justice's new directives for qui tam cases.

Memo suggests shift in DOJ’s qui tam approach

By Brian Hennigan and Padraic Foran

The Department of Justice issued an internal memorandum this month that signals a shift in its approach to qui tam actions, encouraging government attorneys to act more aggressively to dismiss certain False Claims Act cases. Whether this policy will actually result in more dismissals remains to be seen. But the policy is a welcome one, especially for defendants. It also has immediate and significant implications for all qui tam litigants, especially those in the pre-intervention stage.

In every qui tam action filed under the False Claims Act, 31 U.S. Section 3739, the government is authorized to investigate and decide whether to intervene — that is, take over the litigation. About 75 percent of the time, the government declines to do so. But the scant 25 percent of cases in which it does intervene account for the overwhelming majority of recoveries. In 2017, more than 87% of total qui tam recoveries (3,011,269,763) came from intervention cases. Non-intervention cases accounted for less than 13 percent of recoveries (or $425,767,335). In 2016, non-intervenors fared even worse, accounting for just 4 percent of total recoveries.

Despite the low success rate of non-intervention cases, the government seldom seeks their dismissal. Yet dismissal, according to the memo, is necessary if the DOJ is to perform its “important gateway keeper role in protecting the False Claims Act.” And until this month, there have not been formal guidelines for seeking dismissals.

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