During a keynote speech at the 2020 Advanced Forum on False Claims and Qui Tam Enforcement Deputy Associate Attorney General Stephen Cox discussed the Department of Justice’s FCA recoveries in fiscal year 2019 and how enforcement relates to the department’s regulatory agenda. “As the Supreme Court said a few years ago in theĀ Escobar case, the False Claims Act is not supposed to be ‘a vehicle for punishing garden-variety breaches of contract or regulatory violations'” Cox remarked. “However, companies in highly-regulated industries can face significant False Claims Act exposure for regulatory violations anytime federal money is involved. In that light, we have looked at False Claims Act enforcement andĀ qui tam litigation through the prism of regulatory reform, as we look for ways to reduce unnecessary costs and burdens on regulated entities.”
Cox also discussed the rationale behind the Granston Memo and the department’s increased use of its veto authority over qui tam cases it deems frivolous, abusive, or contrary to the interests of justice.Ā “These cases impose unnecessary costs not just on the government, but on the corporate and individual defendants, third parties facing discovery, and of course the judiciary,” Cox noted. “Plus, bad cases often result in bad law, which can inhibit our ability to enforce the False Claims Act in good and righteous cases.Ā In my view, if we see aĀ qui tam action raising frivolous or non-meritorious allegations that the Department of Justice disagrees with or could not make in good faith, we should not let a plaintiff try the case on behalf of the United States.”
Cox noted that in the two years since the Granston Memo was issued, DOJ has moved to dismiss between 45-50 cases, in comparison to the 45 cases DOJ moved to dismiss in the thirty years prior to the issuance of the memo. While the increase in the number of cases dismissed seemed high, Cox added that nearly 1,000 qui tam cases had been filed in that time frame.
Cox went on to discuss DOJ’s interpretation of guidance documents as having less impact on FCA liability than formal rulemaking and how the department will coordinate with other agencies to avoid piling on a defendant who may have violated multiple statutes with one bit of misconduct.
