03 August 2020

Senator Grassley Drafting Relator-Friendly FCA Amendments

In a July 30 speech from the floor of the Senate honoring National Whistleblowers Day, Senator Charles Grassley announced that he is working on legislation that would “clarify” purported “ambiguities created by the courts” regarding the proper interpretation of the False Claims Act.

The only specific “ambiguity” mentioned by Senator Grassley in this speech concerns DOJ’s authority to dismiss FCA cases over relators’ objections, and DOJ’s increasing exercise of that authority following DOJ’s issuance of the Granston memo.  As we previously reported, Senator Grassley has taken issue with the view of the majority of courts, which have held that DOJ’s right to dismiss FCA cases over DOJ’s objection is (in his view) effectively unreviewable.

The speech doesn’t suggest that the proposed legislation will seek to eliminate DOJ’s right to dismiss FCA cases over relators’ objection.  Indeed, giving Relators an effective veto over DOJ’s right to control FCA cases could raise significant Constitutional concerns under Article II’s “Take Care” clause.  Rather, Senator Grassley’s comment that “[i]f there are serious allegations of fraud against the government, the Attorney General should have to state the legitimate reasons for deciding not to pursue them in court,” suggests that the proposed legislation would adopt some variant of the minority view of courts that require a stronger showing of good cause by DOJ to grant dismissal over a relator’s objections.  He notes that the proposed legislation “requires the Justice Department to state its reasons and provide whistleblowers who bring the cases an opportunity to be heard whenever it decides to drop a False Claims Act case.”

The suggestion that legislation is necessary to require DOJ to state its reasons for dismissal is a red herring.  No court has held that DOJ need not “state its reasons” for seeking to dismiss.  Even courts adopting the more deferential majority view of DOJ’s dismissal authority require DOJ to provide the non-arbitrary reasons supporting dismissal.  Rather, the legislation may be designed to limit or eliminate DOJ’s ability to seek dismissal based on non-merits reasons (e.g. the associated burdens of being subjected to discovery, or the government’s decision to address the alleged violation through some enforcement mechanism other than FCA litigation).  And Senator’s Grassley’s comments clearly suggest that the legislation would require some kind of actual evidentiary hearing by the Court.

While DOJ’s dismissal authority is the only specific purported “ambiguity” mentioned by Senator Grassley, it would not be surprising if his proposed legislation were to also address other purported “ambiguities.”   In particular, Senator Grassley has for years been decrying the Supreme Court’s Escobar decision and court rulings that have, in his view, interpreted the materiality required in ways perceived to be favorable to defendants.  See our previous post here.

We will continue to monitor these developments closely, as Senator Grassley has a record of successfully advancing litigation that has legislatively overruled judicial interpretations of key FCA provisions, such as the public disclosure bar, or otherwise narrowed defenses to FCA claims.

A link to Senator Grassley’s speech can be found here.

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