Since 1986, the False Claims Act has required qui tam relators, who file FCA lawsuits on behalf of the Government, to file the complaints secretly. The FCA provides that the complaint will remain “under seal” for 60 days. During this 60-day period, the Government is supposed to investigate the alleged fraud and decide whether to intervene in the lawsuit. However, at the end of the 60-day period, the Government can request additional time to investigate, which it frequently does. There have been FCA complaints sealed for years and even more than a decade. The American Civil Liberties Union (ACLU) sought a declaratory judgment from the United States District Court for the Eastern District of Virginia that these seal provisions violate the First Amendment and Constitutional separation of powers. The District Court rejected the ACLU’s arguments and a divided Fourth Circuit affirmed the District Court’s opinion. See American Civil Liberties Union v. Holder, Case No. 1:09-cv-00042-LO-TRJ, 2011 WL 1108252 (4th Cir. Mar. 28, 2011).

The ACLU made three constitutional challenges:

  1. The seal provisions violate the First Amendment by denying the public access to judicial proceedings.
  2. The seal provisions violate the First Amendment by gagging relators from speaking about their qui tam complaints.
  3. Congress violated separation of powers by infringing on a court’s “inherent power to determine on an individualized basis whether a qui tam complaint should be sealed.”

Argument #1: First Amendment Right of Access to Judicial Proceedings

The Fourth Circuit acknowledged that the U.S. Supreme Court has held that, though “not absolute”, “the First Amendment guarantees a right of access to criminal trials and certain criminal proceedings.” Additionally, most circuit courts, including the Fourth Circuit, have extended this right to civil trials and civil filings.

The Fourth Circuit chose not to decide whether this First Amendment right extends to access to qui tam complaints. Instead, the Fourth Circuit assumed that it does for purposes of the appeal. Nonetheless, the Court still found the seal provisions permissible because the United States “has a compelling interest in protecting the integrity of ongoing fraud investigations”, and the seal provisions are “narrowly tailored” to serve that interest. The Court reasoned that the public’s right needed to be balanced against such factors as “the complex nature of modern fraud investigations, the government’s limited resources, and the unique nature of a qui tam action under the FCA.” In an FCA case, a private litigant unconnected to the Executive Branch files a suit with no notice to the Executive on behalf of the United States. By contrast, in a typical suit, the Department of Justice investigates the matter before deciding whether or not to file a suit. The seal provisions help ensure that control of the lawsuit and enforcement of the FCA remain with the Executive, not private litigants.

Seal provisions give exec control mech. - Thus, the Executive Branch retains “sufficient control” over the relator's conduct to “ensure that the President is able to perform his constitutionally assigned dut[y],” Morrison v. Olson, 487 U.S. 654, 696, 108 S.Ct. 2597, 2622, 101 L.Ed.2d 569 (1988), to “take Care that the Laws be faithfully executed.”

To support its holding that the seal provisions are “narrowly tailored” to protect ongoing fraud investigations, the Court also cited the provision of the FCA that requires the Government to show “good cause” to continue the seal beyond the initial 60-day period. In practice, however, based on numerous FCA cases that remain sealed for years, this purported “good cause” standard appears to be a very easy standard to meet.

Argument #2: First Amendment Right to Speak About Qui Tam Complaints

The Court held that the ACLU lacked standing to make this First Amendment challenge because it is not a relator being prevented from speaking. The ACLU argued that, though it has not been prohibited from speaking, it is a “willing listener”. However, the ACLU’s failure to identify a specific “willing speaker” that would speak to the ACLU but for the gag provision was fatal to this argument.

Argument #3: Separation of Powers

The Court acknowledged that “Congress may not disrupt the balance among the branches of government by preventing another branch from accomplishing its constitutional function.” Without much explanation, the Court held that the seal provisions do not violate separation of powers because they “do not intrude on the zone of judicial self-administration to such a degree as to prevent the judiciary from accomplishing its constitutionally assigned functions.”

The Dissent

Judge Roger L. Gregory, dissenting, found the Government’s purported “compelling interests” insufficient because the seal provisions apply to all qui tam complaints irrespective of whether those so-called interests are implicated. For example, the interest of not tipping-off the target of an investigation may not be implicated because the target may already be aware of it. In practice, a defendant will likely become aware of a sealed complaint when the Government begins to use its investigatory powers to demand that the defendant produce documents and other information.

Due Process Concerns Implicated by Seal Provisions

Though the Fourth Circuit did not address the issue, defendants may have an additional constitutional argument relating to the seal provisions based on the particular facts of a case. In some cases, the Government has requested and received extensions the seal period for many years. During the seal period, the Government has the ability to take one-sided discovery of the defendant through its investigatory powers. Meanwhile, documents that a defendant may one day seek are destroyed and witnesses’ memories fade. The Government’s use of the seal provisions to delay prosecuting an action to gain an unfair tactical advantage or in reckless disregard for the defendant’s ability to defend against the claims may violate a defendant’s right to due process. See United States v. Eight Thousand Eight Hundred and Fifty Dollars in U.S. Currency, 461 U.S. 555, 563 (1984).