On April 26, 2015, the United States District Court for the Middle District of Florida declined to stay a pending False Claims Act (FCA) case due to the defendants’ filing of bankruptcy.

Although a petition for Chapter 11 bankruptcy ordinarily operates as a stay of an action against the debtor, the court held that FCA cases are exempt from the automatic stay through the entry of judgment.  Accordingly, the court found that it should permit the action to proceed to the entry of a final monetary judgment against the debtor, but that the District Court cannot enforce the judgment.

To view the District Court’s opinion, click here.

Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527, iwood@kslaw.com.