On March 20, 2017, the US District Court for the Southern District of Mississippi denied a motion to permanently seal the record of previously dismissed False Claims Act (FCA) claims. The three relators, who initially brought the claims in US v. Apothetech Rx Specialty Pharmacy Corp., claimed they would face potential reputational damage and retaliatory actions if the case was not permanently sealed. The court ultimately held, however, that such “generalized apprehensions of future retaliation” were not enough to overcome the strong public right of access to judicial proceedings.
The underlying qui tam complaint was initially filed on August 14, 2015, and alleged the defendants engaged in a fraudulent scheme of improperly compensating independently contracted sales representatives for referrals. The relators voluntarily dismissed the complaint a year later in August 2016. Upon dismissal, however, the court temporarily sealed all case records related to the case to permit the relators time to file the present motion to seal.
In their motion for a permanent seal, the relators asserted that unsealing the complaint would “seriously imperil their future careers and employment prospects,” and could subject them to retaliation from their current and future employers. The relators argued that, as the case was voluntarily dismissed before the complaint was ever served on the defendants, there was not a public interest that outweighed the potential harm in this case. The relators also pointed out that the government routinely asks for and is awarded permanent seals on information related to its investigative techniques.
The court denied the relators’ motion for a permanent seal. Noting that such closed proceedings “must be rare and only for cause shown that outweighs the value of openness,” the court held that the relators’ concerns alone, even if well-founded, “are insufficient to overcome the public right to access judicial records.” The court found that the relators’ “generalized” and “imprecise” concerns of future reprisals from health care employers at large did not “specify how they would suffer such loss.” Further, the court pointed out that relators were not without legal remedies for retaliatory actions: relators could seek relief from retaliation through the FCA itself (31 U.S.C. § 3730(h)) or through other remedies like tortious interference with business relations and defamation. Many of these arguments were adopted from the United States’ response memorandum in opposition of the motion to seal, which was filed on October 21, 2016.
As an alternative to a permanent seal, the relators also requested the court permit them to submit a redacted complaint, which would remove all personally identifying information about the relators. The court noted that such a redacted complaint would have the same effect as a permanent seal on the case, and denied this request as well.
This case underscores the significant public interest in open judicial records and, particular to FCA cases, reinforces the legal burden on relators to present specific circumstances in order to permanently seal or even redact an FCA complaint.