This post was written by Andrew C. Bernasconi and Nathan R. Fennessy.
After Congress and the courts have spent the past few years making it easier for private citizens acting in the name of the government (also known as “qui tam relators”) and the government to maintain False Claims Act (“FCA”) cases, and eliminating many of the defenses for FCA defendants to dismiss frivolous claims, a recent appellate decision provides a level of comfort to parties defending against allegations of FCA violations that are initiated by qui tam relators. The decision from a three-judge panel of the United States Court of Appeals for the Sixth Circuit, in the matter of United States ex rel. Summers v. LHC Group, No. 09-5883 (October 4, 2010), provides additional support for defendants seeking dismissal of FCA allegations where qui tam relators fail to comply with the FCA’s statutory requirements (which include filing the initial qui tam complaint in camera and under seal, see 31 U.S.C. § 3730(b)(2)).
The Sixth Circuit panel held that violations of the FCA’s unique procedural requirements can preclude relators from maintaining actions on behalf of the government. Specifically, the Sixth Circuit panel affirmed dismissal of a relator’s FCA allegations because the relator failed to file the complaint in camera and under seal, as required by the FCA. While several courts across the country (including the U.S. Court of Appeals for the Ninth Circuit) previously have limited the opportunities for defendants to obtain dismissal in such circumstances, the Sixth Circuit expressly declined to follow the clumsy balancing tests employed by these courts. Instead, the Sixth Circuit concluded that the statutory procedures governing qui tam complaints are clear, and that Congress did not intend to allow exceptions to the procedures except as expressly set forth in the statute.
This decision provides strong support for FCA defendants to seek dismissal of qui tam complaints where the relator failed to follow the statutory requirements of filing the initial complaint under seal, or otherwise disclosed the complaint’s allegations while the matter remained under seal and subject to the government’s investigation. Although the government can still pursue FCA allegations against a defendant in its own right, the Summers decision serves as a strong basis for defendants to support dismissal where the relator has ignored the statute’s plain requirements, and where the government declines to pursue the case.