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Bill Barr Vows to ‘Diligently’ Prosecute Fraud Law He Once Called an 'Abomination'

William Barr appears for his confirmation hearing. (Photo: Diego M. Radzinschi/ALM)

William Barr, President Donald Trump’s nominee for attorney general, pledged Tuesday to support efforts to prosecute fraud against the government, standing down from his past criticism of a law that allows whistleblowers to reap hefty rewards for exposing false claims for federal dollars.

During a stint in the Justice Department under the George H.W. Bush administration, Barr scribed a lengthy legal memo taking aim at the False Claims Act. Describing the statute as an “abomination,” Barr wrote in 1989 that its provision allowing private citizens to sue on behalf of the government replaced the Justice Department’s prosecutorial discretion with the “mercenary motives of private bounty hunters.”

At the time the assistant attorney general in charge of the Office of Legal Counsel, Barr ascended under the first Bush administration to the top job at the Justice Department. Now, a quarter-century later, Barr has returned to a markedly different U.S. Senate. At the Senate Judiciary Committee Tuesday, he ran into Sen. Chuck Grassley, R-Iowa, regarded as perhaps the most vocal supporter of whistleblowers in Congress. It was Grassley who spearheaded an overhaul of the False Claims Act in 1986, which has gone on to produce nearly $60 billion in settlements and court judgments.

Under questioning from Grassley, Barr testified Tuesday that he would “diligently enforce the False Claims Act.”

When asked whether he believed the law was unconstitutional, Barr replied, “No, senator. It’s been upheld by the Supreme Court.” And when asked whether he believes the False Claims Act protects the American taxpayer, Barr said, “Yes, senator.”

Barr, of counsel at Kirkland & Ellis, had signaled weeks before his confirmation hearing that he would back down from his past criticism of the law. In a 2001 interview for an oral history of the George H.W. Bush administration, Barr recalled that he wanted the Justice Department to challenge the False Claims Act but was rebuffed by the solicitor general at the time, Kenneth Starr. In early January, Reuters reported that Barr recently said in private that his prior statements are outdated and that he believes the Justice Department’s present handling of False Claims Act cases protects the federal government’s interests, making a constitutional challenge no longer warranted.

Lawyers for corporate clients know the law as a “cash cow” for the Justice Department, as two Mayer Brown partners called it in a blog post in 2017 that looked at the pressure companies face to make a deal or risk being sued and potentially paying a significant penalty.

“At least in the mortgage industry, allegations abound that the DOJ has abused its power by cajoling and pressuring settlements with questionable legal foundation on the bet that few want to be sued by the federal government,” Mayer Brown partners Krista Cooley and Laurence Platt wrote in their post.

Under the Trump administration, Justice Department leaders have made a mark on the government’s approach to cases alleging false or fraudulent requests for federal dollars—with an eye on moderating or even subverting whistleblowers’ efforts. In a memo last year, Michael Granston, director of the DOJ civil division’s fraud section, urged department lawyers determining whether to intervene in a whistleblower’s case to also weigh whether “the government’s interests are served” by stepping in to seek dismissal. The so-called Granston memo stressed the Justice Department’s “important gatekeeper role in protecting” the False Claims Act and the role that dismissal can play in preserving “limited resources.”

On Tuesday, Grassley said it was “important to allow whistleblowers to pursue cases even when the department is unable to be involved.” When asked about the circumstances under which the Justice Department should move to dismiss whistleblower cases, Barr answered that he had not reviewed the memo and was not familiar with the thinking of the Justice Department’s civil division.

“But if I’m confirmed, I will review it, and I would be glad to come sit down with you and discuss it. And if there are areas you’re concerned about, I’d be glad to work with you on that,” Barr said.

The Justice Department appears to have already acted on Granston’s guidance. In December, department lawyers moved to dismiss 11 cases brought by Health Choice Group against several pharmaceutical companies. The Justice Department said Health Choice Group’s allegations lacked “sufficient factual and legal support” and would run contrary to previous guidance issued by the Department of Health and Human Services’ inspector general. A month earlier, in November, the Justice Department told the U.S. Supreme Court that it would move to dismiss a whistleblower case against Gilead Sciences Inc., if the matter was sent back to the federal trial court.

Also last year, before departing for a top in-house job at Walmart, then-Associate Attorney General Rachel Brand released a memo prohibiting Justice Department lawyers from basing theories of liability in civil enforcement cases on noncompliance with other agencies’ guidance documents and from using “its enforcement authority to effectively convert agency guidance documents into binding rules.”

Still, through settlements and judgments, the federal government recovered nearly $2.9 billion in the fiscal year ending Sept. 30, 2018. While sizable, the sum broke a yearslong streak in which the government recovered more than $3 million.

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