DOJ to Tamp Down Qui Tams

by Doug Chartier

The U.S. Department of Justice has been reluctant to dismiss weak cases that whistleblowers bring under the False Claims Act. But a leaked DOJ memo signals a change in tack that could lower contractors’ risk of FCA claims.

Last month, an internal memo from DOJ Fraud Section Director Michael Granston urged federal prosecutors to consider more FCA whistleblower claims for dismissal. The Jan. 10 “Granston Memo” recommended that DOJ attorneys move to dismiss these qui tam claims when they are “facially lacking in merit,” duplicate an existing investigation or could interfere with an agency’s policies or programs, among other factors. The new direction could reduce the volume of qui tams the DOJ must monitor and that companies must defend against.

Under the FCA, a private whistleblower, referred to as a relator, can file a qui tam action against a contractor with claims that it defrauded the government. The DOJ then decides, based on the case’s merits and other factors, whether it will intervene and take over the action or decline intervention and allow the relator to see the case through to its resolution. Qui tam relators stand to receive up to 30 percent of their case’s total recovery, which can mean a multimillion-dollar bounty in many cases.

In fiscal year 2017, qui tam relators brought 12 new cases each week on average. Qui tam cases yielded $3.4 billion in settlements and judgments, which constituted 93 percent of all of the DOJ’s FCA recoveries that year.

To read this story and other complete articles featured in the February 12, 2017 print edition of Law Week Colorado, copies are available for purchase online.