EDVA: FCA seal provisions are constitutional

by bvernia | August 27th, 2009

Judge Liam O’Grady issued an opinion on August 21 in ACLU v. Holder, which challenged the False Claims Act’s seal provisions on three constiutional grounds.

The ACLU, along with co-plaintiffs OMB Watch and the Goverment Accountability Project sued Holder and EDVA clerk Fernando Galindo in their official capacities, seeking an injunction against the seal provisions, 31 USC §§ 3730(b)(2) and (3). The plaintiffs argued that the seal provisions violated the constitution in three ways:

  • Denied them their First Amendment and common-law rights of access;
  • Comprised a content-based restriction on the speech of relators; and
  • Violated the separation of powers.

The Court first reasoned that the First Amendment provided no right of access because a qui tam complaint does not adjudicate substantive rights, unlike summary judgment papers, which the Fourth Circuit had previously ruled must be publicly available. Judge O’Grady likewise rejected the plaintiff’s argument that the “experience and logic” test used in prior Fourth Circuit cases required disclosure, noting that the “processes protected by the seal provisions – the government’s investigation and evaluation of the relator’s allegations – are not the type of processes that historically have been open to the public.” He disagreed with the plaintiffs that disclosure of sealed qui tam complaints would promote the cases’ efficient and just resolution, because disclosing it could “tip off the perpetrators and hinder the investigation.”

Judge O’Grady also found that, even if the right of access was protected by the First Amendment, the provisions were narrowly tailored to serve a compelling government interest – i.e., safeguarding law enforcement operations. He similarly found that there is no common law right of access to sealed qui tam complaints, which he found to be judicial documents.

As for the plaintiff’s argument that the seal provision was a restriction on relator’s speech, the Court first found that they lacked standing to assert relators’ rights. Not only did the plaintiffs lack a close relationship with relators, the relief they sought ran counter to relators’ interests in preserving the secrecy of their allegations and identities. Judge O’Grady then noted that the FCA did not prohibit relators from speaking about their allegations. Although relators who breached the seal could have their suits dismissed, this was not a civil or criminal penalty. In any event, he concluded, the restriction was neither a content-based restriction on speech nor a prior restraint.

Finally, Judge O’Grady dismissed the plaintiffs’ separation of powers argument – i.e., that the FCA seal “infringes on a court’s inherent authority to decide on a case-by-case basis whether a particular FCA action should be hidden from public scrutiny”. The FCA neither dictates an outcome in a case nor usurps the courts’ “core function” of deciding cases on a case-by-case basis, he wrote, noting that the “good cause” requirement for extensions of the seal period provided built-in case-by-case judicial review.

The ACLU of Virginia’s Rebecca Kim Glenberg handled the case for the ACLU, OMB Watch and the Government Accountability Project. The US was represented by AUSA Richard Sponseller and DOJ Civil Fraud Section Trial Attorney Sanjay Bhambhani. Taxpayers Against Fraud Education Fund filed an amicus brief, and was represented by Zach Kitts of Cook & Kitts of Fairfax, Virginia.

(It is interesting to note Judge O’Grady’s concession, in a footnote in his discussion of the “narrow tailoring” requirement (p. 14, n. 5), that “the Court recognizes that ‘good cause’ extensions have produced lengthy delays in some FCA cases, contrary to Congress’ intent when it added the seal provisions.”)

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