Advising False Claims Act Clients When Considering Government Declines

The Wells Fargo scandal and it's relation to internal linking and the False Claims Act

This year’s Taxpayers Against Fraud convention was on overdrive or maybe it was just that I had too much coffee. Either way, the majority of the attorneys in private practice who do the plaintiff’s side work on False Claims Act cases attended.

In my view, the biggest news, if you can call anything news when all the government officials claim to be presenting “not the opinion of the government but my own personal opinion,” came from Michael Granston. He is the Director of Civil Frauds for the Department of Justice and is more or less E.F. Hutton to us, so we listen.

At TAF Mr. Granston allowed as how Government Attorneys should be sure to share with Plaintiff’s counsel reasons why they decline cases.

Most do.

When they do not, however, it puts us in a nightmare of trying to figure out what to advise our clients. It matters that Granston came down squarely on the side of sharing such information with Relator’s counsel. Hopefully, all other government attorneys will hear that point.

How do you advise a client to either go forward with their case or not, when you cannot determine the reasons the government is declining? Sometimes the government finds out facts you just have no way of knowing. Sometimes, they see issues with your case you did not.

Sometimes the Department may learn from the Agency that you are right but nonetheless the Agency does not see it as big a deal. Nobody is happy, about facts like this, but in making a determination about going forward everyone needs to know.

It was refreshing to hear Mr. Granston say this kind of information should be shared presumably as part of a joint privilege so as not to prejudice the government’s claims.

This same week Mr. Granston also was quoted as saying the DOJ would now move to exercise its authority to dismiss “baseless” cases. Others heard him say this at TAF I confess to have missed it, if he did. This could be a big deal depending on when they dismiss or when they scare Relator’s counsel that they will dismiss claims.

The Government as the Real Party in Interest has always had the discretion to dismiss a False Claims Case, but in practice, even when we agree to a dismissal they seek a dismissal without prejudice to the U.S. Does this policy change that? As has been repeatedly pointed out the Government also constantly complains about lack of resources. The only solution to that other than the government hiring more lawyers and investigators is to have the Realtor’s bar carry the burden of bringing cases forward. If so, they can hardly want to dismiss cases when the Relators are willing to do so.

One hears horror stories, but for the vast majority of cases when the government declines it is time to step back and discuss. Something happens when you bring a False Claims Case. To do so, you have to believe in it.

While it is under investigation you believe in it. The longer the investigation lasts the better your chances and the more you believe in your case. Prudence suggests that if at the end of that line the government is saying no, you better know why.

If it truly is baseless it seems not much would be gained by pursuing the matter and it’s not the end of the world if the U.S. dismisses it. Still is it baseless? Everybody has an exception to a rule.

I hope that the DOJ will put more of an emphasis on the point I was lucky enough to hear Mr. Granston make, they must tell Relators and their counsel why they make declination decisions. Reasons for such a decision may not make us happy but the vast majority of times they will properly inform our advice to clients.

There is just too much involved to keep us in the dark.