Today the Fourth Circuit U.S. Court of Appeals in Richmond, Virginia, issued a long-awaited decision upholding the seal provision of the False Claims Act (FCA), 31 U.S.C. § 3730(b)(2). The decision is a victory for whistleblowers who depend on the seal provisions to protect themselves from retaliation and to preserve evidence that might be destroyed if fraudsters learn of the impending government action against them. The decision lets stand a 2009 decision to dismiss a suit brought by the American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP). Now is the time to urge these three organizations to accept this decision and stop this misguided litigation.
The FCA is the most powerful whistleblower protection law and America’s most successful tool against fraud. It allows whistleblowers to bring claims on behalf of the government to recover damages for fraud committed by government contractors and grant recipients. Last year alone, the U.S. government recovered over $3.1 billion as a result of FCA claims filed by whistleblowers under this law. Dep’t of Justice, False Claims Act Statistics (Nov. 23, 2010). Since 1986, the government has recovered more than $27 billion. Whistleblowers have filed 63% of FCA cases since 1987. While whistleblowers filed only 8% of FCA matters in 1987, they filed 80% of FCA matters in 2010.
The “seal” is a key provision of the FCA’s success. Whistleblowers must initially file their FCA claims “under seal,” as the law has required since 1986. This provision permits employees to confidentially file their claims, without having to expose their identities to their employer or other companies that may be hostile to hiring workers who blow the whistle while the government investigates their claim during the seal period. The FCA provides that the seal will prevent public disclosure of the suit for 60 days while the federal government decides whether to intervene in the case. The government can request an extension of the time for this seal, or move to stay the case under 31 U.S.C. § 3730(c)(4). The courts determine if the extension or stay is in the public interest. These fraud schemes are often complex and usually require more than 60 days to investigate them. However, at the end of the seal period, the court must unseal the case and the case file becomes pubic when the seal expires.Continue Reading 4th Circuit upholds the FCA’s seal, 2-1; Urge ACLU, OMB Watch and GAP to stop here