Posts Tagged ‘fca seal’
Monday, March 28th, 2011
The ACLU lost its most recent attempt to strike down the seal provisions of the False Claims Act. The ACLU had lost its case in the Eastern District of Virginia and then appealed to the Fourth Circuit. The Appellate Court affirmed the district court’s decision to dismiss the ACLU’s case.
The American Civil Liberties Union filed the lawsuit in 2009, making a facial constitutional challenge to the long standing seal provisions of the FCA. The False Claims Act allows the qui tam plaintiff/relator to file the civil complaint under seal, which means the complaint is not served on the defendant until the seal is lifted by judicial order. The seal allows the government time to investigate the complaint without alerting defendants to the specific allegations. Depending on where the case is filed, the government frequently asks the judge for extensions of a sealed complaint to allow it more time to conduct its investigation. At some point, the complaint becomes unsealed.
The seal makes filing False Claims actions more attractive to whistleblowers because the whistleblowers enjoy anonymity while the government is conducting its investigation of the defendants. If the complaint is under seal, the defendant does not know that a whistleblower is involved and many times, does not know that it is being investigated. Whistleblowers who are current employees of a defendant that is committing government fraud are able to assist the government in its recovery of fraudulently obtained government funds without worrying unduly about retaliation for reporting the illegal conduct.
Oddly, the ACLU sought to strike down the seal provisions on the grounds that they acted against the whistleblower’s right to free speech, that the seal violated the public’s right of access to judicial proceedings, and that the seal impermissibly violated the doctrine of separation of powers. The ACLU was not able to point to a single whistleblower that agreed with the ACLU’s position, however, and admitted that it did not have much familiarity with the workings of a qui tam action.
The Fourth Circuit pointed out that seals are often ultimately lifted in qui tam cases and that the United States has a compelling interest in protecting the integrity of ongoing fraud investigations. Kenney & McCafferty applauds the Courts’ rulings in this matter and looks forward to continuing working with qui tam relators in sealed government fraud investigations.
Tags: abuse, corruption, False claims, False Claims Act, FCA, fca seal, FERA, fraud reward, government fraud, government fraud recovery, Qui Tam, relator reward, whistle blowing, whistleblower, whistleblower reward
Posted in Corporate Tax Fraud, False Claims Act, Recent News, retaliation, Uncategorized, Whistleblower Protection | Comments Off