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Justice Department Plan to Weed Out “Frivolous” Whistleblower Cases May Do More Harm than Good

(Image: Doug Thompson / State Department, modified by POGO)

Whistleblowers beware: the Department of Justice has gotten more aggressive in deep-sixing False Claims Act cases it deems a waste of the government’s time and resources, “frivolous,” or “opportunistic.” Michael Granston, a director of litigation in the Justice Department’s fraud section, recently issued an internal memorandum directing government attorneys to ask courts to dismiss qui tam lawsuits—False Claims Act cases filed by whistleblowers—if certain factors are present.

While we agree the government needs to whittle down the backlog of qui tam lawsuits (even in cases where the government declines to formally intervene, it must expend resources monitoring and occasionally providing discovery in them), the new policy may not be the best way to do it. The policy could lead to a chilling effect on whistleblowers and the dismissal of worthwhile lawsuits that stand a good chance of recovering taxpayer money stolen through fraud.

The government has long had the authority to seek dismissal of lawsuits over the whistleblower’s objection, but it has rarely done so. “While it is important to be judicious in utilizing” this authority, Granston advises, “it remains an important tool to advance the government’s interest, preserve limited resources, and avoid adverse precedent.”

In seeking dismissal, attorneys are instructed to consider whether the lawsuit: 1) lacks merit; 2) duplicates a pending government investigation and adds no useful information; 3) interferes with an agency’s policies or programs; 4) interferes with the Justice Department’s “litigation prerogatives”; 5) poses a national security risk through the disclosure of classified information (the memo explains that “the government need not demonstrate that continued litigation will result in the disclosure of classified information….[T]he government has a strong argument that the risk of disclosure, alone, justifies dismissal.” [Emphasis in original]); 6) will result in a monetary recovery less than the cost of litigation; or 7) contains procedural errors that will “frustrate the government’s efforts to conduct a proper investigation.”

Some of the factors seem to afford the government plenty of latitude to seek dismissal. For example, the fact that cases need not actually result in the disclosure of classified information could derail many lawsuits alleging misconduct on defense or intelligence contracts. Worse, the list of factors is non-exhaustive, according to the memo.

The memo could also be setting the stage for a battle over transparency. A footnote in the memo mentions that the Justice Department will “collect information on an annual basis” regarding the number of qui tam cases dismissed upon motion by the government. However, it doesn’t say whether this information will be shared with Congress or the public. Unless this data is released, we will have no idea if the Department is wielding its authority wisely and effectively.

The Project On Government Oversight noted the policy change several weeks ago when we blogged about the Department’s latest annual False Claims Act fraud recovery statistics. We explained that a government motion for dismissal won’t automatically spell doom for a qui tam plaintiff, although it will certainly carry great weight with the court.

Granston first revealed the new policy at a conference last fall, reportedly expressing concern that “frivolous” qui tam litigation is creating a burden not only for the government, but also for industry. Although the memo betrays no pro-business or anti-whistleblower leanings—Granston reminds his colleagues “the Department plays an important gatekeeper role in protecting the False Claims Act”—POGO is mindful of the influence wielded by the business groups behind the long-running campaign to gut the False Claims Act.

In fiscal year 2017, the government recovered a total of $3.7 billion in False Claims Act cases. More than 90 percent of the total was recovered through qui tam actions. The significance of this statistic was not lost on Acting Assistant Attorney General Chad Readler, who proclaimed last month that “whistleblowers are often essential to uncovering the truth.”

Time will tell if the new policy will discourage whistleblowers and deter the reporting of fraud, waste, and abuse committed by companies and individuals entrusted with our money. What is of more immediate concern is whether this is really the best way to deal with the backlog of qui tam lawsuits. A more sensible policy would be to divert the resources the Justice Department expends on seeking dismissals to the process by which it evaluates the merits of a case and determines whether the government should intervene. A few years ago, we documented the Department’s shortcomings in this regard when it was looking into whistleblower lawsuits alleging contract fraud in Iraq. After reviewing the cases for more than four years, the Department sheepishly admitted it still had not completed its investigation and thus was “not able to make a fully informed decision regarding intervention.”

This new policy may not be the best way for the Justice Department to fulfill its role as the “gatekeeper” and protector of the False Claims Act. Instead, it may hinder the fight against fraud and help those who are accused of cheating Uncle Sam—many of whom are lobbying to weaken the law.