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FCA Qui Notes
January 31, 2019

DOJ Back and Better Than Ever (or just back)?

Qui Notes: Unlocking the False Claims Act

As the federal government reopened this week after 35 days partially shut down, the Department of Justice wasted no time in flexing its False Claims Act muscles. 2019 may have begun belatedly, but DOJ is making up for any tardiness by opening up with a bang.

Recovery announcements during the shutdown ground to a virtual standstill, with only three recoveries announced between December 21, 2018 and January 27, 2019. All three recoveries related to a settlement and corporate integrity agreement entered into with a single defendant. As soon as the government fully reopened, so did the floodgates of DOJ press releases. On January 28 (the first business day after the shutdown ended) DOJ announced four recoveries—followed by two more announcements the next day and one more the day after. Notably, while the number of recoveries stalled during the shutdown, DOJ fared extraordinarily well in terms of dollar amounts. Between the three separate recoveries, the one settlement agreement cumulatively brought in more than $200 million. This means that the shutdown may not actually dampen FY2019's total recoveries as some have speculated—assuming DOJ can keep up the pace for the next three quarters.

Other notable FCA developments were reflected in remarks by Deputy Associate Attorney General Stephen Cox at the 2019 Advanced Forum on False Claims and Qui Tam Enforcement. Cox emphasized DOJ's continued commitment to utilizing the FCA to pursue fraudsters and touted last year's (arguably lackluster) $2.8 billion haul as evidence of the Department's hard work. He touched on the Granston Memo as well, observing that prior to the memo DOJ may have gone entire years without moving to dismiss cases over relators' objection, but that since 2017 DOJ has moved to dismiss roughly two dozen cases being pressed by relators. This shift is one that has only become evident to the broader world of FCA practitioners in very recent months, but Cox's statements that Granston dismissals will be both "judicious" and "consistent" going forward give hope that there may be even more of these yet to come.

Cox also touched on the Brand Memo, the internal DOJ memo from January 2018 cautioning civil enforcement not to treat other agencies' guidance about their own regulations as binding law sufficient to establish FCA liability. The emphasis on this policy is well-taken, given that DOJ recently revised the Justice Manual to include a new section titled "Limitation on Use of Guidance Documents in Litigation." This new section memorializes the direction in the Brand Memo, consistent with Cox's latest remarks.

Finally, Thursday of this week will signal the end of an era in FCA enforcement as Dan Anderson (Deputy Director, Fraud Section) steps down after more than 22 years in the Department. With his departure, many ongoing healthcare FCA investigations can expect to receive new supervisors soon. Anderson's replacement has not yet been announced, but we expect news on that front in the very near future. Taken together with Bill Barr's nomination for Attorney General (and Barr's colorful FCA track record), this shakeup in leadership promises to make 2019 a year with great potential for change.

With the longest government shutdown in history now in the rearview mirror, DOJ seems eager to dive headfirst into 2019 with aggressive pursuit of recoveries and continued policy and personnel evolutions. Whether this energy is destined to bode well or ill for defendants on balance is something that remains to be seen.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.