Straddling the Circuit Split on “Filing Under Seal,” as appeared on Law360

The Supreme Court of the United States on June 27, 2011, denied certiorari in U.S. ex rel. Summers v. LHC Group Inc., 623 F.3d 287 (6th Cir. 2010), leaving unsettled a split within the circuits over the impact of a relator's failure to comply with the filing-under-seal provisions of the federal False Claims Act.

The relator in Summers filed suit under the FCA's qui tam provisions but did so on the public docket rather than under seal, as required by § 3730 of the statute. Her later efforts to have the complaint sealed were unsuccessful, and the district court ultimately dismissed her complaint on grounds that the failure to comply with the seal procedures was "a fatal deficiency" depriving her of the right to pursue her FCA claim and frustrating the procedure's underlying purposes. The relator appealed to the U.S. Court of Appeals for the Sixth Circuit, arguing that the district court should have applied a balancing test where the nature and circumstances of her procedural violation would be taken into account in considering dismissal.

Specifically, the relator urged the Sixth Circuit to adopt the balancing approach articulated by the U.S. Court of Appeals for the Ninth Circuit in U.S. ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242 (9th Cir. 1995). In Lujan, the relator had filed her formal FCA complaint under seal but had previously made similar allegations publicly in wrongful termination and worker's compensation proceedings. Additionally, it appeared that after filing her qui tam complaint, she had provided information on her case to at least one newspaper, which ran a story discussing her claims.

Based upon these violations of the filing-under-seal provisions, the defendant had obtained a dismissal of the complaint by the district court. The Ninth Circuit reversed, rejecting a per se rule and instead holding that the court must consider (1) whether and to what extent the government was harmed by the relator's failure to comply with the seal requirements, (2) the nature and relative severity of the particular violation, and (3) whether the relator had acted in bad faith.

In Summers, the Sixth Circuit rejected any "Lujan-style balancing test" as "a form of judicial overreach." The Sixth Circuit explained, "Congress has created the qui tam cause of action in False Claims Act cases, and has imposed procedural conditions on that cause of action as it sees fit to balance competing policy goals. We will not second-guess its calculus; without meeting those conditions, a False Claims Act plaintiff has no more right to bring suit in the Government's name than any other private person."

The relator in Summers petitioned the Supreme Court for certiorari. In an amicus brief filed at the court's invitation, the federal government expressed its disagreement with the Sixth Circuit's decision. The Sixth Circuit's "inflexible approach," the government argued, found no support in either the FCA's text or purpose, and was at odds with Lujan.

While agreeing that the question presented warranted resolution by the court, the government argued, however, that "[t]he present case does not provide a suitable vehicle" because it appeared that the relator's claims were alternately subject to dismissal under the FCA's first-to-file bar. Perhaps for this reason, the court denied the petition for certiorari. The circuit split thus remains unsettled, and resolution will have to await another day.

In the meantime, FCA defendants are well advised to confirm that a relator has complied with the statute's filing-under-seal requirements. While the per se rule of Summers and the balancing approach of Lujan might, for the time being, result in different conclusions based upon the particular circumstances presented, it is at least clear that failure to follow the FCA's filing-under-seal provisions may subject a relator's complaint to dismissal.