The False Claims Act (FCA), which dates back to the Civil War, provides a cause of action under which whistleblowers can sue to redress fraud on the federal government by government contractors. For the past 22 years, whistleblower complaints under the FCA have been filed in secret, keeping allegations of contractor fraud private until they can be reviewed initially by the government. Now, however, the American Civil Liberties Union, OMB Watch and the Government Accountability Project (collectively, the ACLU) have brought a lawsuit to challenge the constitutionality of FCA provisions mandating that whistleblower complaints be filed under seal. American Civil Liberties Union et al v. Mukasey et al, 1:09-cv-00042-LO-TRJ (filed January 15, 2009). The case is before U.S. District Judge Liam O'Grady in Alexandria, Virginia and names as defendants the U.S. Attorney General and the Clerk of Court in their official capacities. The complaint alleges that approximately 1,000 whistleblower suits are now under seal and together conceal from the public widespread "allegations of military contractor fraud in the Iraq War."
Two of the ACLU's principal contentions are that the statute provides insufficient judicial discretion in determining whether a seal is warranted in a particular case and that the statute permits cases to be sealed indefinitely. These arguments, however, do not appear to acknowledge the complexity of the FCA or the government's required role in these lawsuits. The government responded on April 17, 2009 with a motion to dismiss, challenging the plaintiffs' standing to attack the statute (because they are not whistleblower plaintiffs) and arguing that the statute is validated by prior constitutional precedent. That motion is scheduled for hearing in June.
The FCA "Secrecy Provisions"
Since 1986, FCA whistleblower suits, also known as qui tam suits, have been filed under seal and served privately on the United States. Qui tam suits permit private parties with knowledge of fraudulent government claims to file civil actions in federal court on the government's behalf. The FCA provisions requiring such whistleblower complaints to be filed under seal are commonly referred to as the FCA "secrecy provisions."
The FCA secrecy provisions state that qui tam "complaint[s] shall be filed in camera, shall remain under seal for at least 60-days, and shall not be served on the defendant until the court so orders." 31 U.S.C. § 3730(b)(2) ("mandatory secrecy provision"). Before that 60-day period is over, the government must either inform the court: (1) that it will intervene and proceed with the action or (2) that it will not intervene. If the government has not decided within 60 days whether it will intervene, the government "may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal." 31 U.S.C. § 3730(b)(3) ("secrecy extension provision"). While the case remains under seal, the plaintiff may not publicize the suit.
The ACLU Challenge
The ACLU's complaint sets forth a two-pronged challenge to these secrecy provisions. First it argues that the FCA statute violates the public's First Amendment rights by denying the press and public information about allegations of fraud on the government, as well as denying whistleblowers a right to speak about the matter. Second, the ACLU asserts that the FCA secrecy scheme violates the separation of powers doctrine because it infringes on a court's inherent power to determine on an individualized basis whether a case should be sealed. To support these arguments, the ACLU asserts that the statute provides insufficient judicial discretion to determine the necessity of a seal in each case and the statute allows cases to be kept sealed, and thus secret from the public, indefinitely. Both of these arguments, however, do not appear to recognize the competing interests balanced by the FCA.
Principally, the mandatory FCA secrecy provisions grant the government what appears to be a reasonable two-month time frame in which to conduct an initial investigation—a legitimate government purpose. Indeed, the legislative history of the 1986 FCA amendments states that the purpose behind the 60-day seal period was twofold: first, to enable the government to investigate the allegations in the whistleblower's complaint in order to determine whether the case warrants government intervention; and second, to avoid compromising any pending criminal investigations by tipping off the defendant. S. Rep. No. 99-345, at 24 (1986). Congress created the 60-day seal period to allow a reasonable amount of time for the government to achieve these goals. The Senate reasoned that keeping the allegations private from the public for 60 days has the same effect as if the whistleblower had notified the government directly about the fraud and of his intent to sue. In either situation, the government would need an opportunity to study and evaluate the information. The government's motion to dismiss stresses that the "primary purpose" of the provision is to permit such an investigation "without the alleged wrongdoer's being 'tipped off.'"
Moreover, in contradistinction to one of the ACLU's main contentions, the FCA does indeed allow for a case-by-case determination of the need for privacy. At the end of the initial mandatory 60-day seal, a federal judge makes an individualized decision whether to extend the seal and may do so only if the government demonstrates good cause for the extension. Apparently, Congress, in 1986, believed that 60 days was an adequate amount of time in most cases for the government to coordinate an investigation, review the whistleblower's evidence and decide whether to intervene. Consequently, the legislative history states that "'good cause' would not be established merely upon a showing that the government was overburdened and had not had a chance to address the complaint." Id. at 25. Here, the ACLU complaint alleges that the average time before "the government notifies the court of its election to intervene is approximately 13 months" and cases "typically remain sealed for 2 to 3 years." Thus, it is not the initial 60-day mandatory seal that controls the length of time that the complaint remains hidden from the public in the typical case.
In point of fact, the overall length of time that qui tam cases remain under seal is a function of judicial interpretation of "good cause," rather than, as the ACLU suggests, a direct result of the statute's secrecy provisions. While it is true that the public may be deprived of information about alleged contractor fraud during the investigation, the FCA statute operates to balance the interests of the whistleblower, the government, the defendant and the public. Indeed, the ACLU's argument appears to ignore the defendant's interests and fails to recognize that not all FCA allegations are meritorious. For a defendant in a qui tam suit, mere allegations of fraud—even non-meritorious allegations—could be devastating to its business and, under the new Federal Acquisition Regulation disclosure rule, FAR 52.203-13, could give rise to new reporting obligations. Moreover, because the whistleblower stands in the shoes of the government, the government must be given a meaningful opportunity to assess the legitimacy of the allegations.
The Courts or Congress?
In this context, it appears that the ACLU's efforts may be misplaced. Perhaps a better method to ensure that allegations of contractor fraud remain private for no longer than necessary is to persuade Congress to add a definition of "good cause" to the FCA (e.g., incorporate into the statute the guidance set out in the legislative history). A definition of what the government must demonstrate to convince courts to extend the seal in qui tam cases could provide a more precise and more uniform standard for judges to use in determining whether an extension of a qui tam seal is warranted. A debate over the appropriate meaning of "good cause," as that term is used in the FCA, would allow Congress to examine the current length of the average qui tam seal and decide whether the balance of interests reflected in the 1986 amendments should continue and whether that balance is being properly maintained through current judicial seal-extension decision practices.