Justice Dept. Memo: "Meritless" and "Parasitic" Whistleblower Lawsuits Should be Dismissed

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January 26, 2018

A new U.S. Department of Justice memo advised attorneys to consider dismissing “meritless” or “parasitic” whistleblower lawsuits filed under the False Claims Act (FCA), Reuters reports.

The FCA allows whistleblowers to sue companies on behalf of the government to recover taxpayer money that was paid based on allegedly fraudulent claims. Whistleblowers are entitled to a portion of any settlement or verdict. In 2017, the Justice Department reported $3.7 billion in FCA settlements and judgements - $3.4 billion of which came from cases originated by whistleblowers, who took home nearly $393 million. 

The article notes that the U.S. Chamber Institute for Legal Reform has said the FCA has become a “lucrative money machine” for plaintiffs’ lawyers. The number of whistleblowers is over 600 per year.