Dear Readers:
The Supreme Court today handed down its unanimous decision in State Farm Fire & Casualty Co. v. U.S. ex rel Rigsby et al, and affirmed the 5th Circuit's ruling that a relator's violation of the False Claims Act's "seal" provision, 33 U.S.C. § 3730(b)(2), does not require dismissal of the relator's qui tam complaint. I assume this ruling was widely anticipated since, as the Court pointed out, there is nothing in the False Claims Act's "text and structure" that requires dismissal of a relator's qui tam in the event a relator violates the seal. As to what sanction, including dismissal, may be appropriate for a violation of the seal, the Supreme Court left that to the "sound discretion of the district court."
For those seeking further details about the Rigsby decision, I commend to you Ronald Mann's analysis of the Court's opinion found on SCOTUSblog: Opinion analysis: Justices reject automatic dismissal for seal violations in False Claims Act cases.
A. Brian Albritton
December 6, 2016
Showing posts with label sealing. Show all posts
Showing posts with label sealing. Show all posts
Tuesday, December 6, 2016
Tuesday, December 17, 2013
Refusing to Extend the Seal: Court Refuses Requests to Extend Seal of Qui Tams for Informal Discovery or Settlement Negotiations
Section 3730(2), Title 31, of the False Claims Act ("FCA") provides that when a qui tam relator files an FCA complaint under seal, the case may remain under seal for "at least 60 days" while the government investigates and decides on whether or not to intervene. It is the rare case that remains under seal only 60 days, however, and in some cases, the government keeps the qui tam under seal for years, even over the objection of the relator. For example, one case in the Middle District of Florida, the Wasserman case, was filed under seal in 2004, but the government did not unseal it until 2010.
Ben Vernia at False Claims Counsel blog recently wrote about one federal district court judge in South Carolina who has given notice that the court will no longer agree to these automatic extensions of the seal for qui tams. In a recent "standing order," U.S. District Court Judge Joseph Anderson, Jr. observed that in "recent years, this court has extended the seal period, at the request of the government, on eight occasions in two actions," only to be informed by the government after all that time that it was not going to intervene in those cases.
Judge Anderson noted that the 4th Circuit observed that there are four reasons why Congress adopted the sixty-day seal period: "(1) to permit the United States to determine whether it already was investigating the fraud allegations (either criminally or civilly); (2) to permit the United States to investigate the allegations to decide whether to intervene; (3) to prevent an alleged fraudster from being tipped off about an investigation; and, (4) to protect the reputation of a defendant in that the defendant is named in a fraud action brought in the name of the United States, but the United States has not yet decided whether to intervene." Am. Civil Liberties Union v. Holder, 673 F.3d 245, 250 (4th Cir. 2011). Judge Anderson, however, noted that "none of the foregoing reasons for extending the seal period involve discovery of documents from the putative defendant or settlement negotiations." In turn, the Court observed further that the FCA's legislative history provides that "with the vast majority of cases, 60 days is an adequate amount of time to allow Government coordination, review and decision."
In light of these considerations, Judge Anderson stated that in deciding whether "good cause" exists to continue the seal after 60 days, "henceforth, the court will no longer consider informal discovery and/or settlement negotiations as sufficient grounds for extending the seal period."
If widely adopted, Judge Anderson's position would radically change FCA practice both for relators and qui tam defendants.
A. Brian Albritton
December 16, 2013
Ben Vernia at False Claims Counsel blog recently wrote about one federal district court judge in South Carolina who has given notice that the court will no longer agree to these automatic extensions of the seal for qui tams. In a recent "standing order," U.S. District Court Judge Joseph Anderson, Jr. observed that in "recent years, this court has extended the seal period, at the request of the government, on eight occasions in two actions," only to be informed by the government after all that time that it was not going to intervene in those cases.
Judge Anderson noted that the 4th Circuit observed that there are four reasons why Congress adopted the sixty-day seal period: "(1) to permit the United States to determine whether it already was investigating the fraud allegations (either criminally or civilly); (2) to permit the United States to investigate the allegations to decide whether to intervene; (3) to prevent an alleged fraudster from being tipped off about an investigation; and, (4) to protect the reputation of a defendant in that the defendant is named in a fraud action brought in the name of the United States, but the United States has not yet decided whether to intervene." Am. Civil Liberties Union v. Holder, 673 F.3d 245, 250 (4th Cir. 2011). Judge Anderson, however, noted that "none of the foregoing reasons for extending the seal period involve discovery of documents from the putative defendant or settlement negotiations." In turn, the Court observed further that the FCA's legislative history provides that "with the vast majority of cases, 60 days is an adequate amount of time to allow Government coordination, review and decision."
In light of these considerations, Judge Anderson stated that in deciding whether "good cause" exists to continue the seal after 60 days, "henceforth, the court will no longer consider informal discovery and/or settlement negotiations as sufficient grounds for extending the seal period."
If widely adopted, Judge Anderson's position would radically change FCA practice both for relators and qui tam defendants.
A. Brian Albritton
December 16, 2013
Wednesday, July 18, 2012
Recent False Claims Act Articles That Are Worth A Read
This week I came across two articles on the web concerning the False Claims Act which I commend to readers.
First, I recommend the "2012 Mid-Year False Claims Act Update" recently published by Gibson Dunn as it provides a good, succinct summary of False Claims Act highlights thus far in 2012. The Update addresses such topics as (i) legislative action, both federal and state, and discusses several states that recently amended their statutes as well as numerous other proposed state bills; (ii) surveys recent significant False Claims Act settlements in health care, mortgage and financial services, and procurement and defense industries; and (iii) case law developments and trends, discussing many of the cases highlighted in the blog such as Davis and Schweizer along with recent cases addressing the False Claims Ac "first to file" bar and "public disclosure" bar.
Second, I commend to you the article,"False Claims Act Investigations: Time for a New Approach?" published in October 2011 by John Bentivoglio, Jennifer Bragg, Michael Loucks, and Gregory Luce, all partners at Skadden Arps. The article observes that companies subject to False Claims Act investigations are hampered in their ability to defend themselves since most such investigations are conducted under seal, and the government is able to investigate and use its limited resources at a timetable that suits it. While a qui tam is under seal, the article point out "the government and the whistle-blower have an advantage" because "a company does not know the precise nature of the allegations pending against it and does not have the power of discovery and the right to defend that it is afforded by the federal court system once the suit has been disclosed and the litigation engaged." During this time, the article argues, government and the whistleblower can use the all-to-common extended seal period to keep the defendant in the dark as to precise nature of the allegations against it and to gather the evidence they need.
Given the advantages to the government and whistleblower of an extended seal period, the article asserts that "companies presently faced with a pending false claims investigation might consider whether a more aggressive strategy of forcing the government’s disclosure of the litigation (the unsealing of the complaint and other documents in the file) will better inform the company’s ability to defend itself: to engage in the process of discovery permitted by the Federal Rules of Civil Procedure." In turn, the article contends that several cases and legislative history permit defendants to challenge the government's justification for keeping a qui tam matter sealed.
Companies faced with False Claims Act investigations have a hard choice, and most prefer, as the article acknowledges, to settle or where possible, to dispose of the matter while under seal, thereby controlling the effects of bad press as well as other collateral damage. At the same time, I think that every False Claims Act defense counsel has experienced the frustration of trying to defend a qui tam that is under seal because they are in the dark as to the allegations against the client and the government refuses to disclose the substance of the alleged fraud it is investigating. From the vantage of the defendant, the government appears to employ a lengthy seal period to build a case at its leisure and to avoid having to actually litigate the matter. I would certainly be interested in hearing of any instances where defendants sought to unseal a matter on behalf of their client in order to force the matter into civil litigation as the article suggests.
A. Brian Albritton
July 18, 2012
First, I recommend the "2012 Mid-Year False Claims Act Update" recently published by Gibson Dunn as it provides a good, succinct summary of False Claims Act highlights thus far in 2012. The Update addresses such topics as (i) legislative action, both federal and state, and discusses several states that recently amended their statutes as well as numerous other proposed state bills; (ii) surveys recent significant False Claims Act settlements in health care, mortgage and financial services, and procurement and defense industries; and (iii) case law developments and trends, discussing many of the cases highlighted in the blog such as Davis and Schweizer along with recent cases addressing the False Claims Ac "first to file" bar and "public disclosure" bar.
Second, I commend to you the article,"False Claims Act Investigations: Time for a New Approach?" published in October 2011 by John Bentivoglio, Jennifer Bragg, Michael Loucks, and Gregory Luce, all partners at Skadden Arps. The article observes that companies subject to False Claims Act investigations are hampered in their ability to defend themselves since most such investigations are conducted under seal, and the government is able to investigate and use its limited resources at a timetable that suits it. While a qui tam is under seal, the article point out "the government and the whistle-blower have an advantage" because "a company does not know the precise nature of the allegations pending against it and does not have the power of discovery and the right to defend that it is afforded by the federal court system once the suit has been disclosed and the litigation engaged." During this time, the article argues, government and the whistleblower can use the all-to-common extended seal period to keep the defendant in the dark as to precise nature of the allegations against it and to gather the evidence they need.
Given the advantages to the government and whistleblower of an extended seal period, the article asserts that "companies presently faced with a pending false claims investigation might consider whether a more aggressive strategy of forcing the government’s disclosure of the litigation (the unsealing of the complaint and other documents in the file) will better inform the company’s ability to defend itself: to engage in the process of discovery permitted by the Federal Rules of Civil Procedure." In turn, the article contends that several cases and legislative history permit defendants to challenge the government's justification for keeping a qui tam matter sealed.
Companies faced with False Claims Act investigations have a hard choice, and most prefer, as the article acknowledges, to settle or where possible, to dispose of the matter while under seal, thereby controlling the effects of bad press as well as other collateral damage. At the same time, I think that every False Claims Act defense counsel has experienced the frustration of trying to defend a qui tam that is under seal because they are in the dark as to the allegations against the client and the government refuses to disclose the substance of the alleged fraud it is investigating. From the vantage of the defendant, the government appears to employ a lengthy seal period to build a case at its leisure and to avoid having to actually litigate the matter. I would certainly be interested in hearing of any instances where defendants sought to unseal a matter on behalf of their client in order to force the matter into civil litigation as the article suggests.
A. Brian Albritton
July 18, 2012
Monday, November 14, 2011
Qui Tam Relator's Vague But Real Fears Not Enough to Justify Seal in False Claims Act Case
Just days ago, I characterized courts as being “skeptical” of relators’ requests to seal their dismissed False Claims Act qui tams cases when the government declines to intervene. See 10/31 entry. Skepticism, however, is an understatement. As seen in this recent case, the relator is treated like any other litigant, and the Court dismisses her vague, though real, fears of possible retaliation and never being able to find work as a result of having filed a qui tam suit as insufficient to justify maintaining the seal of a dismissed case.
In US ex rel Ruble v. Skidmore, 2011 WL 5389325 (S.D. Ohio), issued 11/8/2011, the Court again denied a relator’s request to continue the seal of her qui tam suit which she had brought against her former employer, an orthopedic surgeon, and which she now sought to dismiss since the government declined to intervene. In pleading with the Court to continue the seal of her case, the relator expressed her fears that she would be ostracized for having filed suit, saying: “If my role in this case becomes public, I will be forever be viewed with suspicion and distrust in the local medical community . . . . . [which is] quite small and tight knit. . . . I believe my job prospects . . . would be substantially curtailed . . . and doctors who know I reported one of their colleagues to the Government will be leery of trusting me. . . . . I have no other professional training . . . . . It is imperative that I be able to continue working in this medical community.” The relator went on to add that her husband was elderly and unable to work and that she feared “physical retaliation” from her former employer because she had received numerous “hang up” calls and once had been pushed by her former employer’s wife.
The Court denied her request to continue the seal as well as her alternative request to redact her name if the complaint were unsealed. The “primary purpose,” the Court explained, for sealing a complaint is to permit the government to decide whether to intervene, and the False Claims Act “expressly contemplates” the unsealing of the complaint. Only the “most compelling reasons,” the Court noted, “can justify non-disclosure of judicial records,” and “harm to reputation” is not one of those reasons. The Court acknowledged that the relator’s ability to practice her professional locally does “depend[] in part on her reputation in the local community,” but “[e]ven under these circumstances . . . Relator has not demonstrated her privacy interest is sufficient . . .”
I do not mean to harp on about these cases, but I am truly surprised at these opinions. Readers, is this how relators are treated in your districts? For those readers who represent qui tam plaintiffs, in light of these cases are you having to counsel your relator clients more now about the possibility of their complaints becoming unsealed even if dismissed?
In US ex rel Ruble v. Skidmore, 2011 WL 5389325 (S.D. Ohio), issued 11/8/2011, the Court again denied a relator’s request to continue the seal of her qui tam suit which she had brought against her former employer, an orthopedic surgeon, and which she now sought to dismiss since the government declined to intervene. In pleading with the Court to continue the seal of her case, the relator expressed her fears that she would be ostracized for having filed suit, saying: “If my role in this case becomes public, I will be forever be viewed with suspicion and distrust in the local medical community . . . . . [which is] quite small and tight knit. . . . I believe my job prospects . . . would be substantially curtailed . . . and doctors who know I reported one of their colleagues to the Government will be leery of trusting me. . . . . I have no other professional training . . . . . It is imperative that I be able to continue working in this medical community.” The relator went on to add that her husband was elderly and unable to work and that she feared “physical retaliation” from her former employer because she had received numerous “hang up” calls and once had been pushed by her former employer’s wife.
The Court denied her request to continue the seal as well as her alternative request to redact her name if the complaint were unsealed. The “primary purpose,” the Court explained, for sealing a complaint is to permit the government to decide whether to intervene, and the False Claims Act “expressly contemplates” the unsealing of the complaint. Only the “most compelling reasons,” the Court noted, “can justify non-disclosure of judicial records,” and “harm to reputation” is not one of those reasons. The Court acknowledged that the relator’s ability to practice her professional locally does “depend[] in part on her reputation in the local community,” but “[e]ven under these circumstances . . . Relator has not demonstrated her privacy interest is sufficient . . .”
I do not mean to harp on about these cases, but I am truly surprised at these opinions. Readers, is this how relators are treated in your districts? For those readers who represent qui tam plaintiffs, in light of these cases are you having to counsel your relator clients more now about the possibility of their complaints becoming unsealed even if dismissed?
Monday, October 31, 2011
Courts Increasingly Skeptical of Requests to Continue Seal of Dismissed Qui Tam
In my experience defending qui tams suits in Florida's Middle District, courts routinely agreed with the government and relators to keep sealed those False Claims Act qui tams that were dismissed or settled while under seal. Relators were sacrosanct; I never heard of the government opposing a relator's request to keep a dismissed complaint under seal, let alone oppose the relator in instances where the relator claimed that they feared retaliation. Finally, in my experience, courts have most often deferred to the government when it sought to maintain the seal over its motions for extension of time to investigate qui tam complaints. (Is this your experience, readers? Please tell us about the experience in your districts.)
As shown by several recent opinions in the last several months, however, courts are taking an increasingly skeptical view of requests to continue the seal both of dismissed qui tam complaints and of the government's motions for extension to investigate. See US ex rel Danner v. Quality Health Care, Inc., (D. Kan. 10/18/11); US ex rel Durham v. Prospect Waterproofing, Inc., (D. D.C. 10/4/11); US ex rel Littlewood v. King Pharmaceuticals, Inc., (D. Md. 8/29/11), US ex re Rostholder v. Omnicare, (D. Md. 7/28/11). In these decisions, courts unsealed qui tam complaints in the face of claims by relators that they feared retaliation from employers. In turn, these opinions reflect an attitude that courts will no longer defer to claims by relators or the government that they will be prejudiced or harmed if qui tam pleadings are unsealed. See FCA Alert for a discussion of Danner and Durham.
The most thorough case addressing sealing and the request of a relator and the government to keep portions of the qui tam court file under seal is US ex rel Littlewood v. King Pharmaceuticals, Inc. which can also be found at 2011 WL 3805607.
As shown by several recent opinions in the last several months, however, courts are taking an increasingly skeptical view of requests to continue the seal both of dismissed qui tam complaints and of the government's motions for extension to investigate. See US ex rel Danner v. Quality Health Care, Inc., (D. Kan. 10/18/11); US ex rel Durham v. Prospect Waterproofing, Inc., (D. D.C. 10/4/11); US ex rel Littlewood v. King Pharmaceuticals, Inc., (D. Md. 8/29/11), US ex re Rostholder v. Omnicare, (D. Md. 7/28/11). In these decisions, courts unsealed qui tam complaints in the face of claims by relators that they feared retaliation from employers. In turn, these opinions reflect an attitude that courts will no longer defer to claims by relators or the government that they will be prejudiced or harmed if qui tam pleadings are unsealed. See FCA Alert for a discussion of Danner and Durham.
The most thorough case addressing sealing and the request of a relator and the government to keep portions of the qui tam court file under seal is US ex rel Littlewood v. King Pharmaceuticals, Inc. which can also be found at 2011 WL 3805607.
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