Plaintiffs, Cori Rigsby and Kerri Rigsby, filed a False Claims Act complaint, alleging that State Farm attempted to defraud the Government through the National Flood Insurance Program by categorizing Hurricane Katrina wind damage as flood damage. The Plaintiffs filed the complaint under seal as required by the Qui Tam rules. This meant that the Complaint could not be publicly disclosed until the Government decided whether to take on the case itself.
State Farm asked the Supreme Court to hear its appeal to dismiss the False Claims Act case because Plaintiffs’ lawyer publicly disclosed facts about the case to news reporters. The Supreme Court held that this public disclosure, even though in violation of the court seal, did not automatically result in dismissal of a Qui Tam action. The Supreme Court cited the Fifth Circuit’s approach that “no provision of the False Claims Act explicitly authorizes,” much less requires, “dismissal as a sanction for disclosures in violation of the seal requirement.” Lujan, 67 F.3d at 245; Smith, 796 F.3d at 430. The Supreme Court’s decision thus leaves it to the lower courts to determine if dismissal of a Qui Tam case is appropriate. One factor would be whether the improper public disclosure has prevented the Government from performing its own investigation of the case.
