Last week the United States Supreme Court granted certiorari in State Farm Fire and Casualty Co. v. USA, ex rel. Rigsby, Case No. 15-513, to resolve a circuit split regarding the consequences of a qui tam relator violating a seal in a qui tam False Claims Act (FCA) case.  Specifically, the Supreme Court will resolve a three-way split among the circuits regarding the standard that should be applied in determining whether a qui tam case should be dismissed if the relator violates the seal.

In Rigsby, the Fifth Circuit adopted the standard used by the Ninth Circuit to decide whether to dismiss the case when a relator violates the seal.  That standard employs a balancing test pursuant to which courts will dismiss the case only if the seal violation results in actual harm to the Government. 

On the other extreme, the Sixth Circuit has held that dismissal is mandated any time a relator violates the seal.  The Second and Fourth Circuits are somewhere in the middle, finding dismissal is mandated if the seal violation incurably frustrates the congressional goals served by the seal requirement.  And while the Court granted certiorari to answer that question, it refused to review the second question in State Farm’s cert petition, also presenting a circuit split, regarding interpretation of the FCA’s scienter requirement.

At the request of the Court, the United States Solicitor General submitted on behalf of the Government an amicus brief on the question of whether the Fifth Circuit’s ruling warrants review.  In the view of the Government, the Fifth Circuit’s decision that a violation of the FCA seal requirement does not mandate dismissal was correct.  The Solicitor General’s amicus brief reasoned that the Fifth Circuit’s “holding is consistent with Section 3730(b)(2)’s text and purpose, and with the background understanding that courts ordinarily possess broad discretion to determine the appropriate sanction for violations of similar procedural requirements.”  Despite the position of the Government, the Court granted review. 

State Farm’s petition for certiorari is available here. The Government’s amicus brief is available here.  The Fifth Circuit’s decision is available here.

Reporter, Scott Cameron, Sacramento, CA, +1 916 321 4807, scameron@kslaw.com.