DOJ Policy Shifts on FCA Enforcement and Qui Tam Cases
The Department of Justice has revised its Justice Manual, directing prosecutors to limit False Claims Act enforcement based on non-binding agency guidance and to proactively evaluate meritless qui tam actions for dismissal.
The U.S. Department of Justice (DOJ) has updated its Justice Manual to formally change its enforcement policies for the False Claims Act (FCA). The revisions codify two key principles that had been developing in practice. First, the DOJ has limited its attorneys' ability to premise an FCA violation on mere noncompliance with agency guidance documents, requiring that alleged violations be anchored in specific statutes and regulations. While guidance can still be used as evidence of a defendant's knowledge, its legal interpretation can be challenged. Second, the department is now formally encouraging its attorneys to seek dismissal of meritless qui tam (whistleblower) lawsuits. The new policy requires an assessment for dismissal every time the government declines to intervene in a case and broadens the circumstances under which a dismissal can be sought. For companies in highly regulated industries, these changes provide new and stronger arguments to defend against FCA investigations and to advocate for the dismissal of weak whistleblower suits, potentially both before and after the government's initial intervention decision.