Court Grants DOJ’s Motion, Consistent with the Granston Memo, to Dismiss Patient Support Services FCA Litigation

The District Court has ruled on motions filed by DOJ to dismiss FCA cases against certain drug manufacturers in declined qui tam suits, consistent with the principles articulated in the Granston Memo.  We previously described DOJ’s motions here.  On Friday, the District Court for the Eastern District of Texas adopted in part the recommendation of a Magistrate Judge that DOJ’s motion be granted.  Specifically, the Court agreed that the government had satisfied the heightened standard for dismissal adopted by the Ninth and Tenth Circuits, as articulated by the former in Sequoia Orange; namely, that the government has a legitimate interest in preserving its resources, that dismissal was rationally related to that interest, and that there is no evidence that the government’s decision was “fraudulent, arbitrary and capricious, or illegal.”  In particular, the Court found the government’s interest in controlling litigation costs to be legitimate and held that avoiding the need to make employees available for deposition is rationally related to that interest. As such, the Court found it unnecessary to address the Magistrate’s recommendation that it instead adopt the view, embraced by the D.C. Circuit in Swift and other courts (as reported here and here), that DOJ has “unfettered discretion” to dismiss FCA claims.  The court’s opinion is here.

Friday’s ruling bolsters DOJ’s efforts to dismiss meritless qui tam suits but fails to sharpen the split of authority on the breadth of its right to do so.  We will continue to monitor and report on updates on this important issue.