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FCA Qui Notes
August 13, 2020

Raising the (c)(2)(A) Bar: Senior Senator Seeks to Require Department of Justice to Meet Higher Standard in Dismissing False Claims Act Cases

Qui Notes: Unlocking the False Claims Act

The Department of Justice's ability to dismiss False Claims Act cases pursuant to its authority under 31 U.S.C. § 3730(c)(2)(A) may be heading into a new roadblock: Senator Chuck Grassley of Iowa. Grassley, who authored the 1986 amendments to the FCA, has announced he is planning to introduce legislation that would require the Department to articulate its basis for seeking to dismiss a case under its (c)(2)(A) authority, potentially making it more difficult for the Department to dismiss cases.

Depending on the circuit, in seeking to dismiss a case under its (c)(2)(A) authority, the United States has either "unfettered discretion" to dismiss a case, Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003), or must demonstrate a valid governmental purpose and a rational relation between the dismissal and that purpose. See United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1339, 1145 (9th Cir. 1998); see Ridenour v. KaiserHill Co., L.L.C., 397 F.3d 925, 936 (10th Cir. 2005).

In September 2019, Grassley had sent a letter to the Department of Justice seeking to understand how the United States decides when to seek dismissal of an FCA suit against the relator's objections under 31 U.S.C. § 3730(c)(2)(A). See Letter from Sen. Charles E. Grassley, Chairman of Sen. Comm. on Fin., to William Barr, US Att'y Gen. (Sept. 4, 2019). Specifically, the letter questioned the Department's current framework for dismissing cases and raised concerns that the Department was contravening the FCA's purpose by too readily dismissing potentially meritorious suits. See id.

The Department responded two months later. See Letter from Stephen E. Boyd, Assistant Att'y Gen., Office of Legis. Affairs, to Sen. Charles E. Grassley (Dec. 19, 2019). In its response, the Department contextualized cases that it sought to dismiss and argued that the FCA's purpose—protecting taxpayer dollars and the quality of government programs against fraud and abuse—is threatened when "poorly devised cases" proceed. Id. But the Department's response largely skirted questions relating to specific cases about which Grassley's letter sought information. See id.

Perhaps because of his dissatisfaction with the Department's response, Grassley is now seeking to limit the Department's ability to seek (c)(2)(A) dismissals through legislation that would require the United States to meet a higher standard before being able to dismiss a case under § 3730(c)(2)(A). Charles E. Grassley, US Sen., Grassley Celebrating Whistleblower Appreciation Day, Address on US Sen. Floor (Jul. 30, 2020).

At the heart of Grassley's concern is the government's expanded use of its § 3730(c)(2)(A) authority since the 2018 Granston Memo. Following issuance of the Granston Memo, which laid out a framework for seeking dismissal under (c)(2)(A), with a primary focus on curbing meritless or parasitic qui tam suits, there was a significant increase in the United States' filing of (c)(2)(A) motions. See id. For example, since the Granston memo, the United States has sought dismissal of a relator's FCA suit under §3730(c)(2)(A) about as many times as it did in the 30 years prior to the memo's issuance. See id.

This more active interpretation of (c)(2)(A), Grassley argues, runs counter to the 1986 amendments to the FCA that greatly empowered and incentivized relators to file FCA claims. See id. According to Grassley, "[i]f there are serous allegations of fraud against the government, the attorney general should have to state the legitimate reasons for deciding not to pursue them in court." Id. The ability for whistleblowers to prosecute fraud cases under the FCA, Grassley argues, is even more important given the federal government's significant recent spending related to the Covid-19 pandemic, which "has created new opportunities for fraudsters trying to cheat the government and steal hard-earned taxpayer dollars." Id.

Grassley's proposed legislation would require the United States to not only provide a justification for dismissal, but also allow a relator the chance to respond before the court could dismiss the suit. See id. The timeline for the legislation's introduction has not yet been made public. See id.

Given the legislation's nascency, it is difficult to assess what practical effect—if any—it could have on (c)(2)(A) dismissals. For example, in moving to dismiss cases pursuant to its (c)(2)(A) authority, the Department already typically provides its basis for dismissal in its filings. And (c)(2)(A) already provides relators with an opportunity for a hearing prior to dismissal, so how Grassley's proposed legislation would alter this requirement, if at all, is hard to discern. See § 3730(c)(2)(A). Nevertheless, if Grassley's legislation requires the United States to meet a higher standard for (c)(2)(A) dismissals than it currently must, it may make the Department more reticent to seek such dismissals in the future.

© Arnold & Porter Kaye Scholer LLP 2020 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.