The Granston Memo:
The 7 Key Points Explained & A Deeper Look at Its Impact on FCA Qui Tam Actions

“Curbing Meritless Qui Tams”

Dismissal should be considered if the complaint is obviously lacking in merit. Lacking in merit is when an allegation’s factual evidence is frivolous, or the legal theory used is essentially defective.

The goal of this is to ensure the United States retains control over cases filed in its name.

Some examples of the dismissal of filed cases include:

• Factually incorrect claims that have no foundation in evidence.
• Claims submitted to State agencies and did not implicate any Federal Programs
• There was never a fraudulent claim paid or approved by Federal Government
• Allegations that were true did not involve fraudulent activity against the Government

Often times the Government avoids actual case discharge by investigating to the point where declination is advisable. This maximizes its current resources.

An investigator’s conclusion that fraudulent behavior exists may not occur. In this case the DOJ may advise the whistleblower that dismissal will be sought if the relator is not able to support their claim by a specific date.

Attorney Tip: Don’t let the Government dismiss your claim because they determined it was unfounded. Properly submitted claims need to be supported by actionable evidence. Experienced legal teams know what this and will advise you on what else you may need and if what you have is usable.

Determining the quality of a claim is what the DOJ is attempting in this section. Finding out that the claim itself is opportunistic is the next element.

Preventing Parasitic or Opportunistic Qui Tam Action

Moving to dismiss a qui tam suit is recommended on cases that duplicate an active investigation or provides unusable information to the case.

This section of the memo recommends an interpretation on whether the relator would receive an unwarranted reward compared to meaningfulness of their information.

If the DOJ determines that the evidence provided is not useful enough, they will recommend dismissal of the claim.

Attorney Tip: The focus should be on “interpretation”. During the investigation the US Attorneys may decide the information provided was not useful enough and try to deny a claim. An experienced attorney will fight on your behalf, so courts interpret the quality of the information you provide unbiasedly.

Of course, no matter how good the evidence provided is, if the government already has it then a new claim based on the same facts will be recommended for dismissal.

This example shows the government's willingness to forgo new claims that are similar to actions already in progress.

The same willingness to shutdown claims is applied when qui tam actions threaten active governmental programs or policies already in place.

Preventing Interference with Agency Policies and Programs

FCA actions should be removed if they threaten the administration of agency programs or policies already in place.

When the government is presently seeking redress of violations through programs designed to clean-up or rectify the situation, then a qui tam action involving those violations could delay the actual resolution. In this instance dismissal is recommended.

Attorney Tip: Filing an FCA claim against a company whose unscrupulous actions are already being repaired by the government is problematic to success. If the aforementioned company has harmed you, then bringing a case directly against them is a better option for settlement.

A great example of this is a toxic waste area already being clean-up by the Federal Government. If a whistleblower brings an FCA case against the company for different violations, then the clean-up and closure of the facility could be delayed.

When the Government is already working to fix issues, interfering successfully is a difficult, if not an impossible task.

The same goes for overwhelming the court system with additional lawsuits based on the same fraudulent activities.

Controlling Litigation Brought on Behalf of the United States

Protecting the DOJ’s litigation prerogatives by dismissing cases was recommended.

When the government denies a case without dismissing it the relator can still bring action on their own in different court districts.

FCA claims can also be brought against the same defendant, based on the same issue, by different relators.

The Government will seek to dismiss these types of cases based on three things.

1. The actions interfere with the Government’s ability to litigate active claims they have already intervened with.
2. The precedent set by a separate action that is litigated poorly based on the same claim could jeopardize a current case.
3. Dismissing a declined claim that is an obstacle to a settlement in the government’s intervened claims.

Attorney Tip: Being the first to bring a claim is very important. When you have knowledge of fraud don’t wait. Consult an attorney. They can file first or find out if a similar claim is active. If active, you may be able to join the claim if the evidence you provide is substantial and new.

Reporting first and not attempting to circumvent an already active investigation or claim is best.

Sometimes even if these guidelines are followed a dismissal can occur for the safeguarding of classified information or national security.

Safeguarding the Classified Information and National Security Interests

When a qui tam prosecution could potentially endanger national security or expose classified information the government will move to dismiss.

This particular recommendation typically only involves defense and military contractors. If the claim shows an unacceptable risk to national security, then exposing the fraudulent information is stopped.

The application of this is this extremely broad for safety concerns. For a dismissal to be granted the government does not have to prove the information will be revealed as a result of the case.

All that is needed is a strong recommendation that a risk of disclosure is exists. This justifies stopping the claim.

Attorney Tip: Just because the government recommends a dismissal does not mean claims should not be made or that a settlement cannot be reached. Other forms of litigation are possible to ensure valid claims made by a whistleblower are addressed.

The United States defense budget is billions of dollars and they will reward those who provide valuable evidence of fraud.

Another area where government budget interests are being preserved is with the dismissal of cost deficient cases.

Preserving Government Resources

Claims that will cost more to prosecute than a successful settlement will bring in are recommended for dismissal.

Even if the fraud allegations can be proven, if the expense of litigation is higher than the expected return then the government should push for dismissal.

To dismiss the Government can claim that additional costs to taxpayers is a legitimate cause for dismissal of the case.

Even if the claim is litigated by the whistleblower, the government can still claim enormous internal staff costs to monitor the case.

Attorney Tip: The Government can also claim opportunity cost because they cannot pursue cases they deem as having a higher certainty of recovery. Claiming opportunity cost loses requires interpretation of a hierarchy of cases. This is where a qualified qui tam attorney can properly present the importance of your case.

The Government also wants to mitigate their risk. When a whistleblower loses a case the Government may be liable for the defendants legal fees.

Besides cost, the last thing the Granston memo recommends is avoiding relators that frustrate their ability to conduct a proper investigation.

Addressing Egregious Procedural Errors

Dismissal is sought when a qui tam action is hindered by a whistleblower who frustrates the government’s ability to pursue a case.

By ignoring requests to bring an action or committing egregious procedural errors a qui tam case can be undermined.

Attorney Tip: When you work with the government in an FCA action following their direction and telling them everything you know is vital. Any hidden agenda will be cause for the government to recommend dismissal. Claimants can also be held liable for false statements and obstruction of justice.

This is common when a whistleblower is attempting to have the government hand over a case to them. The whistleblower’s motivation is a larger settlement award for pursuing the case without the government's assistance.

These 7 factors and the use of the government’s dismissal policy are applied on a “rational basis”.

The Granston memorandum does not seek a board change in policy, but an enforcement and expansion of regulations already in place under the FCA.

By releasing this memo, we see Granston’s objective is to show the benefits these 7 recommendations provide.