Q: Is It Necessary for the Virginia Attorney General to File A Complaint Under Seal when the Office initiates a case on its own, without a relator?
A: In a word, no. The answer to this question raises a larger issue, however–namely, why is a seal provision included in the statute for a private relator and his or her counsel? The sound reasons behind this statutory requirement is the topic of today’s post.
Like the federal False Claims Act, the Virginia Fraud Against Taxpayers Act authorizes an individual with non-public, first-hand knowledge of fraud on the Government to retain a private lawyer and file a claim on behalf of the Commonwealth. The statute requires that individuals bringing a claim file their Complaint under seal prior to serving it on the Attorney General of Virginia.
The Complaint then remains under seal for at least 120 days while the Attorney General does his or her statutory duty to investigate the claim and make a decision on whether to intervene in the case. During the seal period, it is critical that the relator and relator’s counsel maintain absolute secrecy about the fact that the case has been filed.
As I have often said, the term qui tam gets misused quite a bit. On this blog, I make a real effort to make sure the words qui tam are used only in their correct context, but I am quite certain I must have misspoken somewhere along the line.
In case there was ever any doubt to a reader, the words qui tam should only be used to refer to a case initiated by a private relator and his or her private counsel. The Attorney General also has authority to bring an action without a relator, but such cases are not, strictly speaking, qui tam cases; rather, they are what the United States Department of Justice calls affirmative civil enforcement of the False Claims Act.
There are many differences between affirmative civil enforcement of the VFATA by the Attorney General and a qui tam claim. Among them is the lack of seal requirement for OAG-initiated cases.
The seal requirement is intended primarily to protect the Government’s interests. If private relators and their lawyers were permitted to file civil claims under the VFATA without a seal requirement, there are many ways the Government’s interests could be harmed.
First, there could be parallel investigations or proceedings that the Government wishes to keep secret. The seal period gives the Government a chance to protect its investigations, and at the same time, enhance its investigations by using the relator as a source. Additionally, there is considerable authority for the proposition that the Government may only issue civil investigative demands prior to making its intervention decision.
This is perhaps the most important reason.
Second, the statute could be misused and abused by counsel and relators who did not have the experience necessary to handle a case or who misunderstood the statute. It is also in the interests of defendants, who should not have to answer ill-advised cases, that there be a seal period.
This, indeed, was the experience of Virginia immediately after the VFATA became law in January of 2003, when a number of cases filed under seal were dismissed on the motion of the Commonwealth. In those cases, the 120 day seal period gave the OAG time to consider carefully the claims made in the case, and convince relator’s counsel that the cases did not have merit, or did not fit within the statute.
Like its federal counterpart, the seal requirement of the VFATA is procedural, and not jurisdictional. Thus, in those unfortunate cases where relators have committed a breach of the seal, Courts tend to examine whether there was actual harm to the Government’s position in the case, and whether the ultimate aim of the statute would be harmed by the breach of the seal.