Supreme Court Declines to Adopt Automatic-Dismissal Rule for Violations of False Claims Act’s Seal Requirement

On December 6, 2016, the Supreme Court determined in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby that violation of the statutorily mandated seal requirement, 31 U.S.C. § 3730(b)(2), in a qui tam False Claims Act case does not automatically require dismissal,

Instead the district court has discretion to determine the appropriate sanction under the circumstances – whether it be dismissal or a less severe sanction. See here for Arent Fox’s past coverage of the case.

In an opinion delivered by Justice Kennedy, a unanimous Supreme Court held that the District Court did not abuse its discretion by denying State Farm’s motion to dismiss. Notably, although the Court rejected an automatic-dismissal rule, it did not adopt any particular standard by which a district court should determine whether dismissal, or another sanction, is appropriate for violation of the seal requirement. Instead, the Court analyzed whether the District Court abused its discretion in not granting dismissal and determined that the court did not do so. The Court therefore resolved a split on whether violation of the seal mandates dismissal, but left for future cases the exact standard to apply in determining whether dismissal is warranted.

*This alert was originally posted on Arent Fox’s Health Care Counsel blog. To read this alert in its entirety, please click here.