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State Farm v. United States

ELR Citation: 46 ELR 20185
Nos. 15-513, (U.S., 12/06/2016)

The U.S. Supreme Court, in a unanimous decision, held that dismissal of a suit under the False Claims Act (FCA) is not mandatory when a relator violates a seal requirement. The case involved insurance claims that resulted from the natural disaster, Hurricane Katrina. Respondents, former insurance claims adjusters, filed their qui tam suit under seal in 2006, alleging that an insurance company falsely categorized wind damage as flood damage in order to shift liability to the government. The lower court lifted the seal, allowing disclosure of the action to another district court involved in a similar case. The insurance company then moved to dismiss the case on grounds that the seal requirement had been violated. But the lower court decided against dismissal, and the appellate court affirmed. The Supreme Court upheld the decision. Although the FCA’s requirement that a complaint “shall” be kept under seal is a manda­tory rule for relators, the statute says nothing about the remedy for violating that rule. Because the FCA has a number of express provisions requiring the dismissal of a relator’s actions, it can be inferred that Congress did not intend to require dismissal for a violation of the seal requirement. Kennedy, J., delivered the opinion for a unanimous Court.