In Fraudulent Inducement Qui Tam, DOJ Once Again Invokes Dismissal Authority

As discussed here and here, DOJ during the last administration reinvigorated the use of its statutory authority to move to dismiss qui tam cases over a relator’s objections.  But over the past two years, DOJ’s use of this authority has once again fallen off.  However, last week, DOJ moved to dismiss a qui tam suit in the District of Maryland alleging that the defendants knowingly presented flawed studies to the Department of Health and Human Services (HHS) to induce HHS to purchase defendants’ influenza treatment for the Strategic National Stockpile (SNS).  DOJ’s motion to dismiss serves as an important reminder of the potential benefits of strategically engaging with DOJ and HHS early in the life of a qui tam case about whether dismissal is warranted.

In its filing, DOJ acknowledged the deepening circuit split (analyzed further here) over the appropriate standard for evaluating DOJ motions to dismiss over relator objections—a split that the Fourth Circuit Court of Appeals has yet to weigh in on, although one that the Supreme Court will address next term, as discussed here.  However, DOJ argued that for two primary reasons, its motion should be granted under any standard.

First, DOJ explained that “the United States reasonably determined that the relator’s claim lacks merit.”  Even if the study at issue had never been published, DOJ maintained that the United States would have selected the drug for the SNS, because other clinical data at the time supported the conclusion that the drug was effective at reducing complications and shortening hospitalizations from influenza.  Furthermore, subsequent scientific studies corroborated that the contentious study, despite its methodological limitations, arrived at accurate conclusions.  In fact, since at least 2009, HHS was “aware of, and consistently rejected, the essence” of the relator’s claim.  In particular, the Centers for Disease Control and Prevention “reaffirmed its view—publicly and repeatedly—that the drug is efficacious and suitable for use.”  At base, the “United States contends that it made an informed decision, and that therefore dismissal is appropriate because the gravamen of an FCA claim is fraud.”

Second, DOJ argued that ongoing litigation in this case would impose a significant financial and operational burden on not only DOJ, but also the agencies tasked with addressing public health emergencies, including COVID-19 and monkeypox.  “Simply put, if the United States does not believe that it is in the public interest to pursue this lawsuit, it should not be required to expend limited resources to support continuation of the lawsuit that are critically needed elsewhere.”  Concluding, DOJ noted that multiple circuits have held that the government’s concern with litigation costs “is a valid reason supporting dismissal.”

DOJ’s brief in support of its motion to dismiss can be found here.

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