Qui tam litigation is one of the stranger features of American law. The phrase—short for the Latin qui tam pro domino rege quam pro se ipso in hac parte sequitur, “who sues for the king as well as for himself”—describes a suit brought by a private party in the name of the government. The modern vehicle is the False Claims Act (FCA), which was first enacted during the Civil War. It authorizes a private “relator” to sue, on the government’s behalf, on a theory that a defendant defrauded the United States—and then get a cut of any recovery. The FCA reaches essentially any claim of public-benefits fraud—housing, medicine, and the COVID-19 relief programs alike.
In recent years a particular species of relator has flourished: the anonymous limited-liability company. These entities are in theory “whistleblowers” but in fact litigation vehicles assembled by plaintiffs’ firms, with no insider behind them, alleging facts based on internet research. The pattern is pronounced in suits over the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. Because those programs disbursed billions (often because of fraud) and the loan data is public, such suits sometimes have surface plausibility. PPP and EIDL qui tams can be filed in districts with only the most tenuous connection to the people or businesses they sue.
The Procedural Trap
The FCA’s initial procedure disadvantages defendants. A relator files under seal, and the government has 60 days—routinely extended—to review the complaint and decide whether to intervene in some way.[1] When the government neither takes over a civil case nor dismisses it, but lets the relator pursue it alone in the government’s name, that decision is called a declination. The reviewing U.S. Attorney’s Office has power to dismiss a meritless case at the outset but often declines—the path of least resistance—leaving the defendant to bear the cost of defense against a freshly unsealed case. A defendant may first encounter the suit as a caption reading “United States v.” its own name, which can be mistaken for a criminal charge. (It is not, though the same conduct could in theory be charged criminally.)
DOJ’s May 27 Memo
On May 27, 2026, the Department of Justice issued a memorandum from Brett A. Shumate, Assistant Attorney General for the Civil Division.[2] It calls for “accelerated review” of benefits-fraud qui tams. The key feature is to require attorneys to complete initial review within the 60-day statutory window “to the maximum extent practicable,” and no later than 120 days—a pointed instruction given how freely extensions are obtained. At the close of review the attorney must choose among three options: let the relator proceed with primary responsibility for the case; pursue further government investigation on an expedited track; or move to dismiss “under 31 U.S.C. § 3730(c)(2)(A) because the allegations lack adequate specificity or are legally deficient.” The memo frames this as triage, reserving government resources for the “largest, most complex, and harmful” schemes and signaling that smaller matters may be left to relators.[3]
The Good—and the Gap
There is much to commend. Requiring prosecutors to sift FCA complaints promptly serves the public interest; the field has been crowded with weak, extractive suits. The Supreme Court itself has recognized the FCA’s susceptibility to “parasitic” and “opportunistic” actions.[4] But the memo also predicts it will “increase the number of benefits fraud matters primarily litigated by relators,” even as it states the Department expects to keep handling “the majority of incoming qui tam matters.”[5] Those two statements are hard to reconcile. Historically the government intervenes in only about one in five qui tam cases—commonly put at 20–25%—and nothing here suggests the Department will quadruple that rate. If anything, the compressed clock will move these numbers the other way: investigations that cannot be completed in time are more likely to end in declination, not intervention or dismissal. The realistic effect is more relator-led litigation, not less.
For defendants, that is a mixed outcome. A defendant who prevails against a weak claim usually cannot recover its expenses: when the government declines and the defendant wins, a court may award attorney’s fees only if the relator’s claims were “clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment,” standards met only in exceptional cases.[6]
The encouraging news is that the new Benefits Fraud Memo is not the only key guidance in play here. It directs continuing evaluation—including “whether to object to dismissal on public disclosure grounds or to dismiss” unsubstantiated allegations—and neither cites nor supersedes the Justice Manual’s standing instruction to dismiss qui tam actions that “facially lack merit.”[7] That dismissal authority remains available, and courts mostly review its exercise with deference to the government.
What This Means for Defendants
Companies that got PPP or EIDL funds—and others in the benefits space—should expect more whistleblower filings, shorter response windows, and more relator-led litigation without government intervention. The memo’s whole-of-government posture also means a single complaint may draw civil, criminal, and administrative scrutiny at once, so coordinated strategy matters. Practically:
- Get ahead of the threshold decision. The compressed window is an opportunity: a company that learns of—or anticipates—a complaint has a narrow chance to supply exculpatory materials to the reviewing attorney while dismissal is still on the table and before the matter is publicly docketed.
- Press for dismissal—and keep pressing. Where a complaint facially lacks merit, invoke the Department’s own dismissal guidance. And a declination is not the end: the suit remains subject to the government’s oversight and its authority to dismiss later, leaving room to keep advocating.
- Raise the public-disclosure bar. Many of these complaints are assembled entirely from public sources—loan data, regulatory filings, and news media—and name no original source. That is precisely what the bar is designed to defeat.[8]
- Engage counsel early. Because fee recovery is rare and the review window is now short, an early, well-supported submission urging dismissal is often the most cost-effective defense available.
These cases are beatable. The memo accelerates the government’s threshold decision, but it does not change the substantive defenses. That in turn sharpens the value of getting in front of the reviewing attorney early, before a weak case gains momentum.
Joseph Tartakovsky is an attorney in Eimer Stahl’s San Francisco office whose practice focuses on white-collar defense and investigations and the False Claims Act.
This article is for informational purposes only and does not constitute legal advice or a substitute for legal counsel. It may be considered attorney advertising.
[1]31 U.S.C. § 3730(b)(2)–(4).
[2]Memorandum from Brett A. Shumate, Assistant Att’y Gen., Civ. Div., U.S. Dep’t of Justice, Accelerating Review and Enhancing Enforcement in Benefits Fraud Matters (May 27, 2026) [Benefits Fraud Memo]. It was issued in compliance with Exec. Order No. 14,395, 91 Fed. Reg. 13485, Establishing the Task Force to Eliminate Fraud (Mar. 16, 2026).
[3]Benefits Fraud Memo, supra note 3, at 2.
[4]Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401, 412–13 (2011) (citation modified).
[5]Benefits Fraud Memo, supra note 3, at 2.
[6]31 U.S.C. § 3730(d)(4).
[7]U.S. Dep’t of Just., Justice Manual § 4-4.111 (2021), https://www.justice.gov/jm/jm-4-4000-commercial-litigation#4-4.111; see United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145–46 (9th Cir. 1998) (deferential review of dismissal); United States, ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 435–38, 143 S. Ct. 1720, 1733–34, 216 L. Ed. 2d 370 (2023).
[8]31 U.S.C. § 3730(e)(4); see United States v. Allergan, Inc., 46 F.4th 991, 994 (9th Cir. 2022) (bar blocks suits by relators “who have no significant information of their own to contribute”); United States ex rel. Solomon v. Lockheed Martin Corp., 878 F.3d 139, 143 (5th Cir. 2017).
