The U.S. Justice Department has sought to stave off a challenge to its sweeping authority to dismiss whistleblower cases alleging fraud against the federal government, arguing at the U.S. Supreme Court that its decisions to toss complaints under the False Claims Act are largely "unreviewable."

U.S. Solicitor General Noel Francisco urged the Supreme Court to reject a case that threatens to bring further judicial review to the Justice Department's power to dismiss whistleblower lawsuits brought under the False Claims Act, a federal law prohibiting fraud against the government.

The False Claims Act allows whistleblowers to sue companies in the name of the U.S. government and recover a portion of any proceeds from the litigation. Earlier this year, the department said it had recovered $3 billion from settlements and judgments under the False Claims Act in 2019.

The Trump-era Justice Department in recent years ramped up the use of its dismissal authority in False Claims Act cases. In early 2018, the Justice Department issued a memo—named after Michael Granston, then the director of the civil division's fraud section—explaining how government lawyers should consider pursuing the dismissal of whistleblower claims.

The Justice Department's brief at the Supreme Court emphasized that the law affords the Justice Department ultimate control over False Claims Act cases, with the power to take over disputes it considers worthwhile and to dismiss those it views as lacking merit.

"Treating the dismissal decision as unreviewable is consistent with the [False Claims Act's] text, with the Constitution, and with the general rule that the decision whether to bring an action on behalf of the United States is committed to the executive branch's 'absolute discretion,'" wrote Francisco, who was joined on the brief by assistant attorney general Jody Hunt, the head of the Justice Department's civil division.

The Justice Department's arguments at the high court came in a whistleblower case alleging that JPMorgan Chase & Co. defrauded an affordable housing program enacted following the 2008 financial crisis. The bank, represented by Covington & Burling, filed court papers this week backing the U.S. Justice Department in urging the Supreme Court not to take up the whistleblower's case.

The Justice Department had twice reviewed the whistleblower's claims and declined to intervene. After the fraud claims were dismissed in Washington federal court, a decision later upheld by the U.S. Court of Appeals for the D.C. Circuit, the whistleblower asked to amend his complaint against JPMorgan for a third time. In November 2018, the Justice Department moved to dismiss the case.

The whistleblower's lawyer, Roberto Di Marco of the Massachusetts firm Foster, Walker & Di Marco, asked the justices in November to review the D.C. Circuit ruling.

Di Marco argued that federal courts of appeal are divided over what standard judges should use to determine whether to grant a request from the Justice Department to dismiss a whistleblower's claim under the False Claims Act. He told the justices that the "stricter" D.C. Circuit standard "effectively gives the government complete freedom to dismiss FCA cases."

Covington office Covington & Burling offices in Washington, D.C. Photo: Diego M. Radzinschi / ALM

JPMorgan's lawyers at Covington on Wednesday disputed the whistleblower's argument that federal appeals court are divided over the freedom the government enjoys to dismiss False Claims Act suits.

Covington partners Robert Wick and Mark Mosier described the "minor differences" identified by the whistleblower as "largely academic, as all circuits that have addressed the issue are highly deferential to the government's dismissal authority."

"Indeed, no court of appeals has ever held that a qui tam case should be allowed to proceed despite a government decision to dismiss," Wick and Mosier added, employing a lawyerly term for cases brought under the False Claims Act. "The petition thus fails to present a circuit split that warrants this court's review."

Emphasizing the government's "gatekeeper role," the Justice Department's False Claims Act memo issued in 2018 lists seven factors for the Justice Department to weigh in reviewing whistleblower cases. Among the considerations are curbing meritless litigation and saving government resources.

The so-called "Granston memo" ushered in speculation about how aggressively the Justice Department would seek to dismiss False Claims Act cases.

In recent remarks, Justice Department leaders have said downplayed the memo's significance.

At a conference in Washington last week, Hunt, the assistant attorney general leading DOJ's civil division, said a "surprising amount of ink has been spilled" on the Granston memo, "even though such dismissals actually comprise a small fraction of the total number of qui tam actions filed."

Since January 2018, Hunt said, the department has invoked its dismissal authority in about 45 cases.

"While that's a greater number certainly than we had filed historically, it's important to note that during this same period there were over 1,200 qui tam actions filed," Hunt said. "Viewed in that context, and given that courts have almost unanimously granted our requests to dismiss, I think it is fair we're exercising and will continue to exercise our dismissal authority judiciously."