Tomorrow, the Fourth Circuit Court of Appeals will hear argument in ACLU v. Mukasey otherwise known as the ACLU’s efforts to challenge the seal provisions of the Federal False Claims Act.
As regular readers know, the Federal False Claims Act allows any “person” with first-hand knowledge of fraud on the government to file suit on behalf of themselves, as well as on behalf of the government. Such persons are known as “relators” or “qui tam relators” and they stand to gain a percentage of the government’s recovery.
Pursuant to the statute, relators are required to hire a lawyer (because the government will stand to recover from the case, a relator is unable to file a case pro se). Next, the relator and his or her lawyer prepare a written disclosure statement and serve it on the government prior to filing the case. The written disclosure statement serves as a roadmap to the entire case.
After service of the disclosure, the relator then prepares and files the a complaint, which is filed under seal in the appropriate court. The relator then serves the government again, but not the defendant. The defendant should not be aware of the case at all at that point.
The seal provisions protect the interests of society, to include the government, the defendants, the individual relator, and everyone else.
The seal provisions protect the government in numerous ways. Sometimes the relator’s allegations will already be under investigation by the government. In those situations, the government will be happy to have the assistance of an insider in its investigation. On the other hand, if the relator simply filed the case like any other civil action, the defendants would be put on notice immediately and the government’s investigation would be compromised.
The seal provisions also protect the interests of defendants. Allegations of fraud are very serious, and they should not be undertaken lightly. The seal period gives the government a chance to investigate and, if appropriate, the government will have the chance to discourage a reasonable qui tam relator if the case is not well-founded.
The seal therefore puts important checks on the relator’s considerable power, by ensuring that every qui tam case gets multiple levels of review prior to be made public.
The ACLU’s case is, in essence, that the seal provisions “gag” (the ACLU just LOVES that word) the relator and deprive individual relators of their first amendment rights. This is ridiculous, because no relator is required to file a qui tam action. If the person wants to, they can simply take their allegations of fraud to the press (or to any other place they want) and not file a qui tam action. They are free to do that, and there is no penalty whatsoever.
While individuals sometimes dream of “going to the press” and having their face on the front page of the Washington Post or the New York Times, this almost never happens. Even when an individual has a news worthy story, convincing a reporter to take the time to study and learn about a case is never easy. Just ask Harry Markopolos.
However, if the person wishes to do the maximum good for society, and does not mind following the rules, they can file a qui tam case. Qui tam cases inevitably get more press than some random person trying to catch a reporter’s attention.
And, because blowing the whistle is neither glamorous nor easy, the individual can also receive a substantial cash reward for following the rules. I think any whistleblower will tell you that the money is going to be needed.
And that is exactly what we are talking about here–if a person wants to be a qui tam relator, they have to follow the rules. If they want to go to the press, they can, and there is nothing to stop them. There is no restriction on a relator’s first amendment right.
Of course, there is more at issue than just the Federal False Claims Act. If the Fourth Circuit were to rule in favor of the ACLU, they would be invalidating the numerous states with state False Claim Act/qui tam statutes….and that would be a tragedy indeed.
Hopefully, the Fourth Circuit will swiftly issue a ruling upholding the District Court, and that will be the last we hear about this particular bit of stupidity from the ACLU.