Supreme Court: District Court has Discretion on False Claims Act Seal Violations

The Supreme Court upheld a verdict for two whistleblowers in its opinion today in State Farm v. U.S. ex rel. Rigsby despite a violation of the False Claims Act seal requirement by their former lawyer in the case. The Supreme Court agreed with the Fifth Circuit and District Court that the text of the False Claims Act does not require mandatory dismissal and the question of whether dismissal is appropriate is left to the District Court. Our previous discussion of the facts and issue in Rigsby is here.

The seal is a component of the initial portion of the qui tam lawsuit. The Relator’s attorneys file the lawsuit under seal to give the government a chance to investigate the facts before the Defendant is made aware of the allegations. The seal is mandated by the text of the False Claims Act.

Justice Kennedy wrote the opinion of the Court. The case went to the Supreme Court in a limited procedural posture because the Defendants only sought dismissal of the case as a sanction for the seal violation. The result is that further litigation concerning the appropriate sanction and test to apply will be ongoing.

If you have questions about this decision or the seal requirement, please contact us to speak to one of our False Claims Act attorneys.

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