By Jeffrey A. Newman Esq.

A Sept. 18 rewrite of the Justice Manual turns a discretionary review
into a required one and bars fraud cases built on agency guidance
alone. An official who helped oversee the change, now in private
practice, says the dismissal power will be used more aggressively.
BY JEFF NEWMAN | JEFF NEWMAN LAW
The Justice Department has rewritten the internal rules its lawyers follow in
False Claims Act cases, directing them to decide, every time the government
declines to join a whistleblower’s lawsuit, whether to allow the case to continue.
The change, announced on Sept. 18 and posted the same day to two sections of
the department’s Justice Manual, also bars federal lawyers from building
enforcement cases solely on a company’s failure to follow agency guidance —
the letters, manuals, bulletins and similar documents that were never adopted
as regulations.

The department presented both moves as strengthening fraud enforcement.
“The Department of Justice should enforce the law, not make law through
enforcement,” Associate Attorney General Stanley E. Woodward Jr. said in the
announcement.
Five days later, one of the officials quoted in that announcement described the
practical effect more directly. Paul Perkins, until recently an associate deputy
attorney general, told Bloomberg News that the department’s authority to
dismiss whistleblower suits “will be utilized more aggressively.” Bloomberg
reported that Mr. Perkins helped oversee the revisions and has left the
department to join Morrison Foerster in Washington, where he will chair the
firm’s False Claims Act practice.

What the manual now says
The more consequential change for whistleblowers is in Section 4-4.111, which
governs the department’s power under 31 U.S.C. § 3730(c)(2)(A) to dismiss a
qui tam case over the objection of the relator who filed it.
The previous version said that when lawyers evaluated a recommendation to
decline intervention, they “should also consider” whether to seek dismissal.

The department has widened the first of its seven dismissal factors.
It formerly read “curbing meritless qui tams that facially lack merit,” followed
by a parenthetical confining it to inherently defective legal theories or frivolous
factual allegations. That limiting language is gone. The factor now reads, in
full, “curbing meritless qui tams.” The other six — among them preventing
parasitic suits that duplicate an existing government investigation, preventing
interference with an agency’s programs, and preserving government resources
— are substantively unchanged.

The U.S. attorneys’ offices handling delegated cases must now notify the
Civil Division’s Fraud Section at least 10 days before filing any motion to
dismiss. Sidley’s lawyers read that as tighter central oversight of local
dismissal decisions.
One new sentence cuts the other way. The manual now states that dismissal
“will not be warranted in every declined case,” because the government often
investigates a qui tam “only to the point where it concludes a declination is
warranted, which may not equate to the conclusion that a qui tam is meritless.”
Sidley suggests the department may have added it to answer defendants who
argue that a declination shows a case is weak.
The guidance rule returns
The second revision rewrites Section 1-19.000 and retitles it, from “Principles
for Issuance and Use of Guidance Documents” to “Limitations on Issuance and
Use of Guidance Documents.”
Its core instruction is now flat. Enforcement actions “must be based on
violations of applicable legal requirements,” and the department “may not
bring actions based solely on allegations of noncompliance with guidance
documents.”

Every declination is now also a dismissal decision. The review that
lawyers “should also consider” is now required “in each case.” The
declination memo is no longer the government’s last internal judgment on
a case; a second one is made at the same moment. .

Jeff Newman Law is a national whistleblower law firm. www.Jeffnewmanlaw.com