DOJ Declination Trends and Agency Complicity in FCA Cases

June 16, 2025

DOJ Declination Trends and Agency Complicity in FCA Cases

Whistleblowers may file qui tam suits under the False Claims Act (FCA) on behalf of the U.S. Government, which then has 60 days (often extended) to investigate and decide whether to intervene and prosecute. In many cases the DOJ declines to intervene, leaving relators to pursue the case alone. Notably, DOJ has broad authority to later dismiss such suits under 31 U.S.C. §3730(c)(2)(A), and courts give “substantial deference” to DOJ’s judgment if a reasonable basis is shown. This combination of statutes and internal DOJ policies (e.g. the 2018 “Granston Memo”) frames DOJ’s approach. However, whistleblower advocates and courts have documented patterns where DOJ chooses not to intervene in cases suggesting government agency complicity, often citing policy or resource reasons. These include alleged roles by Contracting Officer’s Representatives, supervisors, or agency programs in the underlying fraud, which DOJ apparently treats as a conflict of interest or risk. Below we detail examples, rationales, and commentary on this trend.

DOJ Declinations Involving Agency Actors

Several reported FCA cases reflect DOJ’s non-intervention when federal agency officials are implicated. For example, in Fine v. University of California (N.D. Cal. 1993), a DOE Inspector General who alleged that his supervisors knowingly ignored fraud at a national lab filed suit under the FCA. The DOJ declined to intervene and even joined the defendants’ motion to dismiss. Similarly, in Day v. Boeing, a recent Eastern District of Virginia case, the relator alleged that the Defense Logistics Agency (DLA) colluded with defense contractors to rig procurement and inflate prices. Despite these claims, DOJ (which had intervened) moved to dismiss the case, arguing that continuing it would create “bad law” since it required proving federal officials themselves broke the law. The court noted DOJ’s concern that “[i]f litigated, it would have been challenging for the whistleblower … to allege that the government itself had engaged in fraud”. These cases illustrate a pattern: even when qui tam complaints suggest direct government involvement or oversight failures, DOJ may refuse to pursue.

The DOJ’s own dismissal guidance underscores this. Under the Granston Memo (2018), DOJ attorneys evaluate factors before dismissing or declining intervention. These include whether a relator’s case “threatens to interfere with an agency’s policies or the administration of its programs,” or if pursuing the case could undermine broader DOJ or national interests. In practice, DOJ has invoked such factors to decline or withdraw, especially where agency programs are implicated. In Day v. Boeing, for instance, Judge Payne explained DOJ chose dismissal because “the relator alleged that the government’s role in the … scheme created an unavoidable conflict of interest,” and continuing would risk adverse precedent. In short, DOJ tends to treat FCA claims as “the Government’s claims” and claims against agencies as problematic.

DOJ’s Rationale for Declining Intervention

DOJ rarely publicly explains individual declinations, but legal filings and testimony shed light on its reasoning. In congressional testimony, whistleblower advocate Neil Getnick noted that DOJ often declines not for merit reasons but due to practical or strategic considerations. For example, DOJ may find the dollar amount too small, be convinced the relator can handle the case, or simply have insufficient evidence to guarantee success. Importantly, DOJ has said declination “may have nothing to do with an assessment of the merits. This echoes FCA practice: even if the case is valid, DOJ might decline if other concerns dominate. In Day, DOJ argued that continuing the suit “could have created bad law for the government,” underscoring how DOJ weighs policy risks.

DOJ’s Granston Memo (2018) codified many of these considerations. It lists factors suggesting dismissal is appropriate – notably, cases that are “facially lacking in merit,” duplicate prior investigations, or threaten to disrupt agency programs. It also directs DOJ to protect litigation interests, safeguard sensitive information, and avoid cases where costs outweigh benefits. A published DOJ slide deck and legal commentary confirm that if these factors apply, DOJ will likely decline intervention or move to dismiss. In Day, for example, DOJ emphasized that adjudicating whether the Government itself committed fraud would impose unacceptable burdens and set adverse precedent.

Additionally, courts note DOJ’s unique litigation powers. In Polansky v. Executive Health Resources(2023), the Supreme Court unanimously held that the Government can dismiss FCA claims even after declining to intervene, with little court interference. This reinforces DOJ’s broad discretion: once DOJ is involved, the FCA entitles it to control the case almost entirely. As one legal analysis put it, “in practice, the government generally will not dismiss a suit it has declined to intervene in unless continuing would create bad law or there is another strong interest.”

Whistleblower Retaliation and DOJ Declination

Ironically, even cases involving alleged whistleblower retaliation can see DOJ’s non-intervention. For instance, a recent qui tam lawsuit alleged that a large medical diagnostics firm not only engaged in a kickback scheme but also retaliated against the former employee who blew the whistle. Despite DOJ having subpoenaed the company in 2015, it ultimately declined to intervene in 2017, forcing the relator to proceed pro se. (The case remains pending.) Thus, documented retaliation – often a strong sign of fraud – did not deter DOJ’s declination.

No public dataset tracks how often retaliation correlates with DOJ declination. However, whistleblower attorneys note that if DOJ steps back, relators lose key legal advantages. The FCA’s anti-retaliation provision (31 U.S.C. § 3730(h)) protects whistleblowers even when DOJ declines, but in practice enforcing that protection is costly and delayed. One legal commentator observed that without government involvement, relators “must take the laboring oar”: they personally review documents, manage discovery, and litigate motions. Indeed, bipartisan whistleblower advocates (including Senate Judiciary staff) have urged caution, warning that DOJ’s new dismissal policies could “permit corrupt contractors to defraud the government with impunity,” especially when agency complicity is alleged.

DEI, Identity Laundering, and Set-Aside Program Abuses

In recent years, the DOJ’s focus on fraud has expanded to include diversity and set-aside programs, but with mixed results. In 2025 DOJ launched a “Civil Rights Fraud Initiative” authorizing FCA use against entities that “knowingly violate federal civil rights laws,” explicitly naming unlawful DEI or “diversity” programs as targets. This new priority departs from past DOJ practice. However, historical enforcement of set-aside fraud (WOSB, 8(a), SDVOSB) has generally been vigorous. For example, DOJ press releases and case reviews report numerous recent 8(a)/SDVOSB fraud recoveries. In 2017–18 alone, DOJ resolved twelve qui tam cases involving SBA’s 8(a) or SDVOSB programs, up from zero in 2013. Courts have even eased relator burdens in such cases – for example, the Federal Circuit held in 2014 that misrepresenting eligibility for an 8(a) set-aside makes resulting contracts “false claims” under the FCA. Similarly, DOJ secured a criminal conviction in 2018 for a “rent-a-vet” SDVOSB scheme, in which an ineligible company won $11M in VA contracts.

These actions suggest DOJ will not ignore identity-based fraud. On the contrary, whistleblowers with credible evidence about minority- or veteran-set-aside fraud “are likely to encounter government lawyers and judges receptive to their allegations”. The concern of “identity laundering” (using straw owners to qualify for set-asides) has been highlighted by GAO and SBA OIG reports, which recommend stronger oversight. Thus, DOJ’s current trend appears to be increased enforcement in these areas. The new DEI initiative similarly signals scrutiny of programs where applicants claim protected status. Still, critics wonder whether DOJ will follow through when federal program officials or policies are implicated. As one whistleblower expert cautioned, allowing DOJ to unilaterally dismiss FCA suits could enable “political” interests to shield fraud – whether corporate or governmental.

Incentives and Constraints on DOJ Decision-Making

DOJ’s declination decisions are influenced by multiple institutional pressures. First, resource limitations and bureaucratic inertia can matter. As Congressional testimony noted, “busy workloads, limited budgets or bureaucratic headwinds” often leave fraud unaddressed unless whistleblowers act. DOJ may decline lower-dollar or complex cases simply because it lacks time or investigative leads. Second, DOJ seeks to protect inter-agency relationships. Pursuing a contractor that colluded with a particular agency could risk embarrassing that agency or clashing with its policies. In Day, DOJ explicitly weighed the risk of setting adverse precedent against its fraud-fighting mission. Third, political pressures exist. Whistleblower advocates warn that unconstrained DOJ dismissal authority could invite improper influence – for example, stifling cases that politically powerful interests want quashed. Even outside the FCA context, the Justice Manual cautions prosecutors against actions “more inclined to embarrass, delay, or burden a third party than to effectuate the federal government’s interests. While DOJ must balance enforcement with diplomacy, critics argue this balance sometimes tilts away from pursuing government-involved fraud.

Finally, DOJ’s own whistleblower and fraud units have recent incentives that could both encourage and discourage intervention. On one hand, DOJ touts record FCA recoveries (over $3.5B in FY2022) and has publicly emphasized new focus areas. On the other hand, internal guidance like the Granston Memo explicitly encourages dismissing or declining more cases to “protect litigation prerogatives”. In practice, DOJ often credits outside relators: billions have been recovered in cases after DOJ initially declined. DOJ also maintains that every declined case is not a sign of weakness but strategic prioritization. Nonetheless, the possibility that DOJ will pass on cases involving its peers’ conduct is a concern voiced by FCA specialists.

Implications for Whistleblowers

For whistleblowers, these trends have important lessons. First, a DOJ declination does not necessarily reflect on the validity of the claim. As noted above, DOJ may step back for non-merit reasons. Relators should be prepared to carry the case themselves: meticulously document evidence, anticipate agency pushback, and secure legal counsel willing to invest in a declined FCA suit. In many instances, relators have successfully litigated declined cases to judgment or settlement – in fact, “billions of dollars” have been recovered in such cases. Whistleblowers should also know that even without DOJ, FCA protections (including anti-retaliation) still apply, but enforcing those protections can be arduous.

Second, whistleblowers alleging agency complicity must consider alternative strategies. They might alert Inspectors General, Congress, or the media if DOJ declines. IG reports or oversight hearings can force agency accountability when DOJ will not prosecute internally. At the same time, whistleblowers should weigh the personal risks: getting fired or blacklisted is unfortunately common, and DOJ’s inaction may limit relief options. Advocacy groups recommend that potential relators engage trusted counsel early, possibly including whistleblower-oriented firms that often have FCA expertise and relationships with DOJ Fraud Sections.

Finally, some policymakers are responding to these challenges. Proposed FCA amendments (as of 2024–25) would require DOJ to disclose more about its reasons for dismissal and limit its unilateral power. Whether such reforms pass remains uncertain. In the meantime, whistleblowers need to enter proceedings with eyes open: DOJ intervention is not assured, especially where federal actors are involved. Persistence is key. As one commentator put it, FCA litigation “is an action-forcing mechanism” to expose fraud that might otherwise be ignored. Whistleblowers and their lawyers should be aware that even if DOJ steps aside, a determined relator can still recover funds and effect change – and often does, despite the initial declination.

Sources: We draw on FCA case law and commentary, government statistics, published DOJ guidance and decisions, whistleblower advocacy testimony, and legal analyses to illustrate DOJ’s historical and current behavior in these FCA cases. Each example is cited above.

Citations

21-1052 United States ex rel. Polansky v. Executive Health Resources, Inc. (06/16/2023)

https://www.supremecourt.gov/opinions/22pdf/21-1052_fd9g.pdf

https://docs.house.gov/meetings/JU/JU10/20160428/104871/HHRG-114-JU10-Wstate-GetnickN-20160428.pdf