Key Takeaways
- Sub-regulatory guidance cannot create False Claims Act liability. The revised Justice Manual confirms that FCA enforcement actions must be based on violations of statutes, regulations, or contractual requirements, not mere noncompliance with agency manuals, FAQs, or other guidance documents.
- DOJ must now assess dismissal in every declined qui tam case. Under the updated policy, DOJ attorneys are required to evaluate whether the government’s interests warrant dismissal under 31 U.S.C. § 3730(c)(2)(A) whenever they decline to intervene, and the revised standard no longer limits dismissal to cases that “facially lack merit.”
Guidance remains relevant as evidence, particularly in healthcare. While guidance cannot establish the underlying legal duty, CMS manuals, Local Coverage Determinations, and similar materials may still be used to prove scienter, notice, industry standards, and medical necessity in FCA cases.
The Department of Justice (DOJ) has made two notable changes to its False Claims Act (FCA) playbook — and both could give FCA defendants additional room to maneuver.
On September 18, DOJ revised the Justice Manual to (1) limit the use of sub-regulatory guidance in enforcement actions and (2) require DOJ attorneys to assess every declined qui tam case for potential dismissal.
Neither development comes entirely out of the blue. DOJ leadership has been signaling both positions for some time. But putting them in the Justice Manual gives defendants something more concrete to point to when pushing back on guidance-heavy FCA theories or advocating for dismissal of declined qui tams.
Agency Guidance Can’t Make the Law — But It Still Matters
The first change is straightforward: DOJ enforcement actions “must be based on violations of applicable legal requirements, not mere noncompliance with guidance documents.”
In other words, agency manuals, FAQs and other guidance cannot independently create FCA obligations that do not otherwise exist in statute or regulation.
If that sounds familiar, it should. The change is something of a policy boomerang. The first Trump administration’s Sessions and Brand Memos imposed similar restrictions before both were rescinded during the Biden administration. The new Justice Manual provisions bring that principle back — and give it a more formal home.
But guidance is not going away.
That distinction is particularly important in healthcare, where providers routinely navigate CMS manuals, Local Coverage Determinations and other sub-regulatory materials. The revised Manual expressly recognizes that those materials may still be relevant evidence — including on scienter, notice, industry standards and whether services were medically “reasonable and necessary.”
So the takeaway is more nuanced than “guidance is out”: Guidance cannot create the underlying legal duty, but it can still help DOJ prove its case.
For defendants confronting a guidance-heavy FCA theory, that puts an important question front and center: What binding legal obligation was actually violated?
DOJ Puts Qui Tam Dismissal Back in the Spotlight
The second change could be equally significant.
DOJ previously instructed attorneys considering declination to consider whether the government’s interests would be served by dismissal under 31 U.S.C. § 3730(c)(2)(A). The revised Justice Manual now says DOJ “will in each case assess” whether dismissal is warranted.
Every proposed declination now comes with a dismissal assessment.
That change formalizes a shift DOJ officials had already been signaling. Earlier this year, Deputy Assistant Attorney General Brenna Jenny put it more colorfully: “(c)(2)(A) is back.”
The numbers reinforce the point. According to figures Jenny reported and Sen. Chuck Grassley later cited, DOJ exercised its dismissal authority 25 times in 2025, compared with approximately six times per year during the prior administration. (Remarks of Deputy Assistant Attorney General Brenna E. Jenny, Federal Bar Association Qui Tam Conference (Feb. 2026); Letter from Sen. Charles E. Grassley to U.S. Dep’t of Justice (Apr. 2, 2026).)
DOJ also broadened one of its dismissal factors. The prior policy referred to curbing meritless qui tams that “facially lack merit.” The revised Justice Manual simply says “curbing meritless qui tams.”
Dropping “facially” could matter. Defendants may have more room to argue for dismissal based on weaknesses revealed through the government’s investigation or subsequent litigation — not simply defects apparent from the complaint.
And declination is not necessarily the last word. DOJ may revisit dismissal as a case proceeds, potentially creating another opportunity for defense advocacy where continued litigation consumes government resources, conflicts with agency interests or risks adverse precedent.
The timing is also notable following the Eleventh Circuit’s recent decision in Zafirov v. Florida Medical Associates LLC, which rejected a constitutional challenge to the FCA’s qui tam provisions. While Zafirov preserved relators’ ability to pursue declined cases, DOJ’s new policy puts renewed emphasis on another check built into the statute: the government’s authority to seek dismissal when continued litigation does not serve its interests.
What It Means for FCA Defendants
The revisions do not signal a retreat from FCA enforcement. Instead, they potentially give defendants two additional advocacy tools.
For guidance-heavy FCA theories, defendants should press DOJ and relators to identify the actual statutory, regulatory or contractual obligation underlying the alleged violation. Guidance still matters as evidence, but it cannot substitute for binding law.
For declined qui tam cases, defendants should consider dismissal advocacy earlier — and potentially more than once. DOJ must now assess dismissal at declination and may revisit the question as litigation develops.
The bottom line: DOJ is drawing a clearer line between violating the law and violating guidance, while directing its attorneys to take a harder look at whether declined qui tam cases should proceed at all.
As Associate Attorney General Stanley Woodward put it, DOJ’s stated objective is to “enforce the law, not make law through enforcement.”
For FCA defendants, the real question is whether the new playbook changes the game — or simply puts DOJ’s recent signals into writing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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