Even Failed Qui Tam Complaints Don't Remain Sealed Forever: A Cautionary Tale for the Relator Who Swings and Misses
Although a False Claims Act (FCA) suit begins under seal, that does not make it "secret" litigation. A qui tam relator's identity will become known eventually, even if the relator would prefer otherwise.
The relator in United States ex rel. Locklear v. Medixx Transport, LLC, CV617-139 (S.D. Ga. Jul. 13, 2018), voluntarily dismissed his suit after the government declined to intervene, but then asked the court to keep the case under seal, for eternity. The court rejected both proffered justifications for this unusual request—one credible, the other perhaps a bit less so.
First, in a professed attempt at magnanimity, the relator argued that maintaining the seal would protect the defendant (which, of course, the relator had accused of fraud) from "negative publicity that may result from the public disclosure of allegations to which it has not had an opportunity to respond." Second, revealing his likely true concern, the relator worried that his failed FCA action might adversely affect future employment prospects.
The court emphasized the "strong presumption that judicial records shall be open to public scrutiny" and reasoned that the FCA's seal requirement is only temporary; it is not meant to keep actions secret indefinitely. As to concerns about future employment prospects, the court concluded that there is no right to file lawsuits anonymously and qui tam actions are no different. Permitting the relator to keep his identity secret forever would "permit relators to assume all of the advantage of bringing an FCA claim without bearing any of the risks."
This case provides a warning for relators that an FCA action can impact the reputations of both defendant and relator. When the FCA's seal period ends, the relator's identity will be public—at which point it will be for others (including potential future employers) to decide whether the relator was a whistleblower about legitimate fraud or perhaps something less noble.
© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.