The qui tam provisions of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., allow private individuals to file suit on behalf of the United States when they have evidence or information that false claims or false statements related to false claims were made to the government. When the FCA was originally enacted in 1863, qui tam complaints were public documents, which meant that a complaint’s allegations of fraud were open to members of the public and were not hidden from the named defendant. In 1986, however, Congress amended the FCA by adding new seal provisions to the statute. These provisions require every qui tam complaint to be filed under seal for 60 days to give the government time to investigate the complaint’s allegations and to decide whether it wants to intervene in the action. While the initial sealing period is only 60 days, cases typically remain under seal for a year or more while the government investigates.

In ACLU v. Holder, (4th Cir. Mar. 28, 2011), the American Civil Liberties Union (“ACLU”), joined by OMB Watch and the Government Accountability Project, filed suit challenging the constitutionality of the seal provisions. The ACLU argued that the seal provisions violate the First Amendment by denying the public’s right of access to judicial proceedings and by gagging qui tam relators from speaking about their qui tam complaints. The ACLU also argued that the seal provisions violate the Constitution’s separation of powers clause by infringing on the authority of lower federal courts to decide on a case-by-case basis whether a particular qui tam complaint should be unsealed.

In a split 2-1 decision, the Fourth Circuit upheld the constitutionality of the seal provisions and affirmed the dismissal of the ACLU’s case. Assuming, without deciding, that the First Amendment right of access extends to a qui tam complaint and docket sheet, the court held that denial of access did not violate the First Amendment because the FCA’s seal provisions are narrowly tailored to serve a compelling government interest of protecting the integrity of ongoing fraud investigations. The court cited three reasons for finding that the provisions were narrowly tailored: (1) Congress balanced the government’s investigatory needs against the need for public access to court documents by crafting a detailed and limited 60-day process for initiating and pursuing a qui tam complaint under the FCA; (2) the seal provisions mandate judicial review at the end of the 60-day period, requiring the government to demonstrate “good cause” to a federal court in order to extend the seal; and (3) the seal provisions limit the relator only from publicly discussing the filing of the qui tam complaint, not the existence of the fraud.

The court also held that the ACLU and other groups lacked standing to assert the claim that the FCA’s gag order provision preventing qui tam relators from speaking about their qui tam complaints violated the First Amendment. The court rejected the ACLU’s attempt to establish First Amendment standing as persons who are “‘willing listeners’ to a willing speaker who, but for the restriction, would convey information,” because the ACLU failed to identify any particular qui tam relator who, but for the seal provisions, was a willing speaker who desired to speak with them.

The court also rejected the argument that the seal provisions violate the separation of powers under the Constitution, holding that the FCA seal provisions are “a proper subject of congressional legislation and do not intrude on ‘the zone of judicial self-administration to such a degree as to prevent the judiciary from accomplishing its constitutionally assigned functions.’”

Judge Gregory wrote a dissenting opinion in which he observed that the result of upholding the seal provisions meant that “we may never know what wasteful spending and fraud against the public fisc persists because of government delay, inaction, or under enforcement . . . .” In his dissent, Judge Gregory concluded that the sealing requirement is facially unconstitutional because “it automatically and categorically seals all FCA complaints for at least 60 days,” and the Government failed to justify its First Amendment infringement with compelling interests and narrow tailoring. He noted that “the freedom to speak about FCA complaints bolsters the public role of relators and pressures the government to rigorously enforce the FCA—or to expeditiously decline to intervene.

It remains to be seen whether the case will be appealed to the Supreme Court or reconsidered by the Fourth Circuit en banc.