State Farm Fire & Casualty Co. v. United States ex rel. Rigsby

Failure to abide by the seal requirement of the False Claims Act does not mandate the dismissal of a complaint filed under the False Claims Act.

Under the False Claims Act ("FCA"), private parties (known as "relators") may seek to recover damages stemming from false or fraudulent claims made by persons to the federal government. Under the FCA, complaints that are filed in camera are supposed to remain under seal for at least 60 days and not be served on the defendant without a court order. Respondents filed a complaint against Petitioner under the FCA, alleging that Petitioner had made a multitude of false claims to the federal government following Hurricane Katrina. Specifically, Respondents alleged that Petitioner instructed its adjusters to reclassify wind damage as flood damage so as to make the federal government liable for those claims. Petitioner moved to dismiss the complaint on the grounds that Respondent's attorney disclosed the pending suit to different news sources in violation of the seal requirement. The trial court refused to dismiss the suit, a decision that the Fifth Circuit affirmed on appeal after holding that dismissal was not required for a violation of the seal requirement. The Supreme Court agreed with the Fifth Circuit's conclusion that a violation of the seal requirement does not require dismissal of the FCA suit. The Court found that, in light of the lack of an express remedy for a violation of the seal requirement in the statute, that Congress did not intend for mandatory dismissal to be the remedy for a seal requirement violation. The Court reached this conclusion after examining the text of the statute and also noting the presence of express conditions under which dismissal was mandated under the FCA. AFFIRMED.