One of the oldest laws to have ever existed in American History is the False Claims Act or the “Lincoln Law”. This law was intended to help protect the government against any party that seeks to conduct fraudulent business with it. This law came into being during the Civil War to prevent Union suppliers from selling inferior goods to the government (for example: sand in place of sugar, sawdust in place of gunpowder, $1000 toilet seats, etc.).
Sadly, the law was deemed ineffective in its intended purpose. It still failed to curb the prevalence of fraudulent business conducted at the expense of the government. This went on until the 1986 amendment that added the qui tam provision. This provision expanded the role of the whistleblower in uncovering fraud intended to put the government at a financial disadvantage, by allowing referrals to sue fraudulent companies in the government’s stead.
Not only that, but the referral is entitled to up to 30% of the awards gained as a result of the False Claim case.
Now, this begs the question:
“What’s to stop malicious people from filing False Claims cases just to earn some money or even to just drain the company’s resources by way of expensive lawyer’s fees?”
The Grandston Memorandum is the answer to this.
According to this memo, the Department of Justice is to direct prosecutors to give more focus on dismissing meritless false claim cases. Though we cannot exactly expect prosecutors to welcome this change with open arms, we can at least provide a defense counsel with a clear guide on how to argue for the dismissal of meritless false claim cases.
The rationale behind this is to avoid the unnecessary expenditure of resources such as time and money, both on the Justice Department and that of the defendant’s perspective. While there are already preliminary guidelines that determine whether a False Act claim is to be deemed valid, the process of hearing a case remains one that is arduous and time-consuming. The memorandum seeks to expedite this process in order to be able to focus efforts on other cases that require more attention.
Because, really, let’s be smart about these types of cases. Why should a defendant go through all the trouble of having to prove that a prosecutor’s legal theory is faulty, when the matter can be resolved then and there by taking a closer look at guidelines that determine whether a false claim shall be deemed ‘meritless’?
This article encapsulates the guidelines mentioned in the previous paragraph.
Now, this doesn’t mean that we are suspicious of False Claims Act whistleblowers. This is simply meant to help weed out those who file claims just for the monetary reward from those who truly mean to help the government.
Some people may argue that this memorandum is, in a sense, encouraging that the government bite the hand that feeds the False Claims Act (the whistleblowers). It is anything but that. It’s simply to address the fact that the number of False Claims Act cases filed are gradually increasing in number. To put things in a realistic scenario, not all these cases are valid, while the few that are, are based on faulty legal theory.