In a surprise announcement, the Department of Justice (DOJ) announced that the government will move to dismiss a qui tam action brought under the False Claims Act when it determines that the case has no merit. This potential policy shift represents a major departure from the government’s past actions in such cases, which typically involve allowing meritless cases to go forward. The announcement was made by Michael Granston, who serves as the director of the commercial litigation branch of the fraud section of the DOJ’s civil division. The policy change was not publicized through official channels, but rather during a pronouncement at the Health Care Enforcement Compliance Institute in Washington D.C. on Oct. 30.

While the DOJ announcement signals a positive potential policy shift for health care companies and others that spend millions every year to defend against frivolous quit tam actions, the DOJ’s past actions and statements create uncertainty that the announcement will lead to actual change. While it has the authority to so, in the past the government has chosen to intervene in only a fraction of qui tam cases and it almost never intervenes to dismiss meritless claims.¹ The DOJ has admitted that it routinely does not devote the resources needed to determine if a qui tam action is frivolous or move to intervene and dismiss such actions.² This has left companies to defend themselves against relators with the resources of the powerful plaintiffs’ bar to pursue their cases.

Between 2008 and 2016, there were a total of 5,486 qui tam actions brought.³ The government filed a motion to dismiss only in approximately 62 of those cases.⁴ In cases involving health care defendants, the government only moved to dismiss approximately 19 of the qui tam actions.⁵ By choosing not to intervene, the DOJ allowed many meritless qui tam actions to go forward, costing companies millions of dollars in legal fees and over $1.8 billion in judgments and settlements.⁶

Given the high stakes involved for health care companies defending against qui tam actions under the False Claims Act, we will closely monitor how the DOJ chooses to respond in upcoming cases.

^{1: See David Engstrom, Public Regulation of Private Enforcement: Empirical Analysis of DOJ Oversight of Qui Tam Litigation Under the False Claims Act, 107 N.W. U. L. Rev. 1689, 1719 (2013) (stating that "DOJ intervenes approximately one-quarter-of-the-time").}

^{2: See The False Claims Act Correction Act (S. 2041): Strengthening the Government's Most Effective Tool Against Fraud for the 21st Century: Hearing Before the S. Comm. on the Judiciary, 110th Cong. 2 (2008) at 56 (statement of Michael F. Hertz, Deputy Assistant Att'y Gen., Civil Division, U.S. Department of Justice) (“We do not routinely devote the additional resources that would be needed to determine that a qui tam action is frivolous or to move to dismiss on those grounds.”); see also id. at 41 (letter from John T. Boese to Sen. Patrick Leahy) (noting that “once the DOJ has decided not to intervene in a particular case, its commitment of resources to that case going forward is quite limited” and that there is “little incentive” for DOJ to stop a case “given the possibility, however remote, of some return on the Government's limited ‘investment’ in the case once the DOJ has declined to intervene”).}

^{3: Fraud Statistics-Overview October 1, 1987- September 30, 2016, Civil Rights Division, U.S. Department of Justice,} 

^{4: Found using comprehensive Westlaw search with date constraints. (government or US /s dismiss! And (3730(c)(2)(a))}

^{5: Id.}

^{6: Supra note 3.}