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March 29, 2011
Fourth Circuit Rejects Challenge to Qui Tam Seal Provision
A divided three-judge panel of the Fourth Circuit on Monday rejected the ACLU's First Amendment challenge to the False Claims Act requirement that qui tam complaints be sealed for 60 days (or more), until the United States decides to intervene.
The FCA allows private citizens (known as qui tam relators) to file suit on behalf of the United States and to share in any recovery from defendants who committed fraud on the government. But qui tam complaints go under seal for 60 days (or more) while the government decides whether to intervene in the case, and qui tam relators are gagged from discussing their complaint (but not the underlying alleged fraud).
The ACLU, OMB Watch, and the Government Accountability Project all brought suit against AG Eric Holder, alleging that the qui tam seal requirement violated the public's First Amendment right of access to judicial proceedings, violated the First Amendment by gagging qui tam relators from speaking about their complaints, and violated separation of powers by infringing upon the courts' inherent authority to decide on a case-by-case basis whether to seal qui tam complaints.
The majority disagreed. Judge Dever (E.D.N.C.), sitting by designation, wrote that the government has a compelling interest in the integrity of ongoing fraud investigations, and that the seal requirement is narrowly tailored to serve that interest because (1) the seal requirement is time-limited to balance the government's investigatory needs against the need for public access to court documents, (2) the seal provision mandates judicial review after 60 days, and (3) the seal requirement limits the qui tam relator only from discussing the complaint, not the underlying fraud.
Judge Dever wrote that the plaintiffs lacked standing as "willing listeners" to challenge the gag rule, and that the seal provision does not violate separation of powers because it's an appropriate subject of congressional legislation and doesn't intrude on the constitutional role of the judiciary.
Judge Gregory argued in dissent that the overly rigid 60-day seal requirement interferes with the "transparency [that] remains central to combating waste and fraud." Op. at 23. Judge Gregory argued that the requirement neither served a compelling government interest nor was narrowly tailored.
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