The United States District Court for the Northern District of Alabama recently ordered that a relator’s qui tam lawsuit must be unsealed upon the case’s voluntary dismissal, denying the relator’s request to maintain the action under seal post-dismissal. This ruling in U.S. ex rel. Meythaler v. Encompass Health Corporation serves as an important reminder that public access to court records is vitally important and that whistleblowers’ allegations and identities will almost certainly be made public, even where the case is dismissed without litigation.
FCA Complaint Filed Under Seal
The relator, a physician formerly employed by the defendant, filed suit under the False Claims Act (FCA) against an inpatient rehabilitation facility operator and the CEOs of two of its Alabama facilities. The complaint alleged numerous schemes, including allegations that the defendants sought reimbursement for treatment of patients who were not eligible for rehabilitation benefits, delayed discharges and other orders to increase reimbursement, and made improper referrals to a home health agency. Per the FCA’s procedural requirements, 31 U.S.C. § 3730(b)(2), the relator filed his complaint under seal, giving the government a statutory period of at least 60 days to investigate the allegations and determine whether to intervene in the case.
The government declined to intervene in the action last fall. The relator then filed a notice of voluntary dismissal with prejudice, to which the government later consented. The relator also filed a motion asking the court to maintain the action under seal even after the case was dismissed to prevent the defendants from learning that the relator had filed a qui tam action against them. The government took no position on the relator’s motion.
Relator’s Concerns about Retaliation
As grounds for his motion, the relator pointed to the allegations in his complaint that the defendants retaliated against him for raising complaints about the allegedly unlawful practices, including terminating his employment. The relator argued that he had demonstrated good cause for the district court to exercise its discretion to maintain the action under seal because his allegations of prior retaliation evidenced a strong likelihood that the defendants would “blackball” him from practicing medicine in Alabama through “industry channels and professional networks” in the community. And, he argued that any retaliation against him by the defendants would have a chilling effect on other potential future whistleblowers. The relator also argued that because the government declined to intervene and he was voluntarily dismissing the case, unsealing the case would not promote public understanding of any historically significant events. The relator argued that his retaliation concerns and the lack of public import of the dismissed complaint outweighed the presumption of public access to litigation materials.
Public Access is Paramount
The district court noted the common law right of access that the public enjoys with respect to judicial records. And, while acknowledging its discretion to maintain documents under seal, the district court concluded that “the hypothetical possibility of future retaliation” does not trump the presumption of public access. Regarding the FCA in particular, the district court reasoned that the “fear of retaliation does not justify an indefinite seal in an FCA case,” siding with other courts within the Eleventh Circuit that have held the same. The district court noted that the relator would have other remedies at law if the defendants were to retaliate against him upon learning that he filed an FCA action against them.
For further updates on FCA litigation and developments, contact a member of the Bass, Berry & Sims Healthcare Fraud Task Force or subscribe to Inside the FCA.