DOJ Official Comments on Brand and Granston Memos

Stephen Cox, Deputy Associate Attorney General, recently spoke at the Federal Bar Association Qui Tam Conference about memos issued by Associate Attorney General Rachel Brand and Michael Granston, Director of the DOJ Commercial Litigation Branch, Fraud Section. The Brand memorandum pronounced the end of the DOJ’s policy of using guidance documents to establish violations of law in civil enforcement actions.  The Granston memo was a leaked internal memorandum issued to department attorneys, which stressed the need to consider affirmatively seeking dismissal in FCA actions brought by qui tam relators in which the government has not intervened.

In his comments on the Brand memo, Cox explained that while noncompliance with a guidance document would not form an independent basis for an enforcement action, a guidance document might be relevant to the regulated entity’s knowledge or scienter.  For instance, a guidance document might be relevant if it provides a plain language explanation of requirements to comply with a regulation, and there is evidence that the regulated entity received and ignored it.  On the other hand, if the guidance document creates additional requirements or prohibitions, above and beyond what the regulation calls for, noncompliance with those additional provisions would not be used to show that the entity has violated the regulation.

With respect to the Granston memo, Cox noted that while there has been a rise in the number of FCA actions brought by qui tam relators in recent years, the government has continued to intervene in only about 1 in 5 cases filed.  And Cox added that even in the other 4 out of 5 cases in which the government has not intervened, the government continues to spend resources in not only its initial investigation, but also in monitoring the litigation, if the relator proceeds.  With that in mind, Cox emphasized the need for the government to exercise its authority to dismiss FCA cases, even in cases where it has not intervened, in situations where a case is meritless; an agency does not believe it has suffered harm; or when the agency takes the position that the alleged false claim was immaterial to its payment.

The DOJ has posted Cox’s comments here.