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March 11, 2019 - False Claims Act

DOJ Plans to Dismiss Another Whistleblower FCA Case

MoForecast Podcast: Predictions on the False Claims Act (FCA)

In the ever-evolving False Claims Act (FCA) arena, the Government told the court that it intends to move to dismiss a whistleblower suit against United Health Group’s Executive Health Resources, Inc. (EHR) for allegedly assisting hospitals in overcharging for outpatient care.  The Granston Memo, issued by Department of Justice (DOJ) in January 2018, directs government lawyers to consider seven factors when contemplating possible dismissal:  (1) Curbing Meritless Qui Tams; (2) Preventing Parasitic or Opportunistic Qui Tam Actions; (3) Preventing Interference with Agency Policies and Programs; (4) Controlling Litigation Brought on Behalf of the United States; (5) Safeguarding Classified Information and National Security Interests; (6) Preserving Government Resources; and (7) Addressing Egregious Procedural Errors.  DOJ gave no specific reason for dismissing the suit against EHR beyond a general reference to “the interests of the United States,” but the history of contentious discovery battles in the case suggests that Granston factor 6, Preserving Government Resources, might have been an important consideration.

Following the Escobar decision, contractors have pursued discovery from government agencies on materiality issues, including information about whether payments were made with knowledge of the alleged violation.  Despite the Granston memo and the decision to dismiss the case against EHR, DOJ has warned contractors that pursuing discovery to make litigation seem onerous will not lead to dismissal, absent other considerations.  Contractors nevertheless should take heart that DOJ is engaging in a meaningful cost-benefit analysis under the Granston memo and is actively dismissing qui tam cases in appropriate circumstances.