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February 5, 2015 Mortgage Fraud

Filing Under Seal and United States ex rel. Bibby v. Wells Fargo

Over the next three posts, we will explore a recent case handled by the U.S. Court of Appeals for the Eleventh Circuit – a jurisdiction covering Alabama, Florida, and Georgia – involving sanctions against a courageous whistleblower with an apparent misunderstanding of the rules of confidential seals. In today’s post, we introduce the concept of filing under “seal,” including a discussion as to why False Claims Act lawsuits are generally handled this way.

Tomorrow, look for a post detailing the specific facts of the case, as well as the procedural history of the matter up to this point. Lastly, we will take an in-depth look at how the court arrived at its decision to overrule motions by the opponent to dismiss the relators’ well-earned reward, opting to impose sanctions instead.

Filing under seal

Before discussing the facts and analysis of United States ex rel. Bibby v. Wells Fargo, et al., No. 1:06-CV-0547-AT, 2015 U.S. Dist. LEXIS 636 (N.D. Ga. Jan. 5, 2015), it helps to first understand the specific and unique filing requirements that pertain to a False Claims Act lawsuit. As an overarching principle, False Claims Act allegations not only require an extensive investigative process by government agencies, but also carry the inevitable likelihood of casting the defendant in a negative light before the public – which is always bad for business. As a result of these concerns, Congress drafted the False Claims Act to include certain confidentiality measures that are mandatory for plaintiffs to follow upon filing their claims.

Known as “filing under seal,” these requirements ensure that a False Claims Act complaint is filed privately and under a complete shroud of secrecy. For a minimum of 60 days, only the relator and the federal government are to be aware that the case has commenced, and the government generally spends this time investigating the merits of the allegations. During the time period the case is under seal, the information shall not be posted publicly on the court’s electronic filing system. The contents of the petition must also be shielded from the media.

After the 60 days (or after a couple of extensions, as is generally the case), the government will either decide to intervene in the case, ask for an extension to investigate the case further, or decline to get involved. At this point, the defendant is formally served with the complaint and the seal is removed, allowing for the public dissemination of the information.

As an important reminder, relators can be excluded from filing a whistleblower lawsuit if the information contained within the complaint is generally accessible to the public, which is another important reason these complaints are kept confidential until the defendant is ultimately served with notice.

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