On October 4, 2010, the Sixth Circuit affirmed the Middle District of Tennessee’s finding that a relator’s failure to file her False Claims Act complaint under seal was fatal to her claim. On March 20, 2009, the relator filed a complaint alleging her former employer, Defendant LHC Group, Inc., had violated the False Claims Act by billing for unnecessary Medicare services to patients and terminating her for pretextual reasons. Four days after filing suit, the complaint was posted on PACER and was publicly accessible for three days before counsel filed a motion to seal. The motion was denied. LHC moved to dismiss the complaint, arguing that the failure to file under seal violated the requirements of the FCA and left the court without subject matter jurisdiction. The district court dismissed the action, finding that the failure to file under seal “is a fatal deficiency that requires dismissal of this action with prejudice as to the relator both because her failure to comply with the statute deprives her of the ability to pursue the remedy created by the statute, and because the same failure incurably frustrates the underlying purposes of the procedural requirements.” United States ex rel. Summers v. LHC Grp. Inc., No. 3:09-CV-277, 2009 WL 1651503 *6 (M.D. Tenn. June 11, 2009).
The Sixth Circuit affirmed, finding that the statutory purpose of the sealing requirement—“to permit the Government to determine in private whether it was already investigating the claims while at the same time preventing defendants from learning they were under investigation”—was “irreversibly frustrated” by relator’s failure to seal the complaint. In so holding, the court expressly declined to follow the Ninth Circuit’s application of a balancing test evaluating the extent of the harm, relative severity of the violation and presence of bad faith. The Court noted that “[u]nder such a regime, plaintiffs would be encouraged to make disclosures in circumstances when doing so might particularly strengthen their own position, such as those in which exposing a defendant to immediate and hostile media coverage might provide a plaintiff with the leverage to demand that a defendant come to terms quickly.” The Court noted that the dismissal by the district court was without prejudice to the United States’ ability to bring the same claims against LHC. The text of the decision is available by clicking here.