• Industry News
  • Access and Reimbursement
  • Law & Malpractice
  • Coding & Documentation
  • Practice Management
  • Finance
  • Technology
  • Patient Engagement & Communications
  • Billing & Collections
  • Staffing & Salary

The False Claims Act and the seal: What whistleblowers need to know


Known as the “Lincoln Law,” the FCA stems back to 1863 and was enacted to root out fraud being perpetrated by suppliers of goods during the Civil War

The False Claims Act and the seal: What whistleblowers need to know


If you’ve been in the healthcare industry long enough, chances are that you have heard of the False Claims Act (“FCA”).[1] In early February 2022, the United States Department of Justice (“DOJ”) announced that it recovered over $5.6 billion in judgments and settlements involving civil FCA cases involving federal government monies.[2] This represents the second largest amount of recoveries ever recorded and the largest amount since 2014.[3] As in years past, health care fraud topped the list for FCA judgments and recoveries. If one steps back to think about the conditions for participation in Medicare, Medicaid, and TRICARE, as well as the number of individual claims that are submitted to the government under these and other government programs, it is not surprising that healthcare is at the top of the fraud list.

Known as the “Lincoln Law,” the FCA stems back to 1863 and was enacted to root out fraud being perpetrated by suppliers of goods during the Civil War.[4] Fast forward to today. According to the DOJ, the FCA has been amended three times since 1986,[5] including the Fraud Enforcement and Recovery Act of 2009 (“FERA”).[6] In 2021, new legislation was introduced to further amend and/or clarify certain aspects of the FCA, including materiality.[7]

In simplistic terms, the FCA establishes liability for conduct whereby a person “knowingly submits a false claim to the government or causes another to submit a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government.”[8] Liability may also be established under a provision known as the “reverse false claim” whereby a person receives money from the government that it should not have received and fails to pay back the government.[9]

The FCA is unique in many respects from a typical civil case filed in a United States District Court. Two of the critical distinguishing factors are who may bring a case and the seal provision. First, an FCA matter may be brought by the government on its own or by a whistleblower, known as a “relator” under the qui tam provision.[10] A lawyer must represent a relator – meaning that unless the whistleblower is a lawyer, then a non-lawyer must be represented by counsel. Second, the case is both filed under seal and is initially kept under seal for 60 days. The government may request extensions of the seal.

The FCA’s requisite seal component is the focus of this article. Regardless of the individual’s background, it is imperative make certain that all persons involved – clients and co-counsel alike - understand the seal provision, as well as the potential consequences for violating the seal. The importance of the seal cannot be understated, as well as the procedural items that attorneys must consider cannot be ignored.

The seal

The FCA requires that the “complaint must be filed under seal”[11] with the clerk of court by relator’s counsel. The pleadings are placed on a docket that is kept out of public purview until the judge “unseals” the case. “Copies of the complaint are given only to the United States Department of Justice (DOJ), including the local United States Attorney, and to the assigned judge of the district court.”[12] In other words, the defendants should not be served, despite what every law student learns in law school – adhere to the Federal Rules of Civil Procedure. The Federal Rules of Civil Procedure may come into play in different ways while a case is under seal; however, it is not until a case is unsealed that Fed. R. Civ. P. 4 (service) applies. This is one landmine to avoid. If you are an attorney, disregard what was learned in civil procedure class until the government apprises you that it intends to decline to intervene in the case and the court unseals the relevant pleadings and you and your client have made the decision to move forward with litigation.[13]

The seal has a variety of functions, which include “allowing the qui tam relator to start the judicial wheels in motion and protect his litigative rights, while allowing the government the opportunity to study and evaluate the relator’s information for possible intervention in the qui tam action or in relation to an overlapping criminal investigation.”[14] While secrecy is fundamental to the seal, as various courts, including the Fourth Circuit Court of Appeals have indicated other material reasons for the seal:

  1. To permit the United States to determine whether it already was investigating the fraud allegations (either criminally or civilly);
  2. To permit the United States to investigate the allegations to decide whether to intervene;
  3. To prevent an alleged fraudster from being tipped off about an investigation; and
  4. To protect the reputation of a defendant in that the defendant is named in a fraud action brought in the name of the United States, but the United States has not yet decided whether to intervene.[15]

Another important consideration of the seal is that the DOJ has the option of opening a criminal matter, which has heightened due process requirements.[16] Depending on the type of case and the complexity of the fraud, cases may remain under seal for a timeframe that may range from sixty-days[17] to over a decade.[18] How does this happen with the FCA expressly states that a case is to remain under seal for sixty days? Another FCA provision allows the government to request seal extensions in camera and under seal, “for good cause shown.”[19] Importantly, the term “good cause” is not defined and is often left up to the discretion of the judge.[20]

A partial seal lift may also occur. A partial seal lift is essentially a request by the government that is made to the court to partially lift the seal for a specific and limited purpose and disclose the existence of a case to the defendants, to share with a third party, or to share with other courts (i.e., state court) which is typical,[21] or for an unusual reason, such as a relator’s request either for their own law firm or for the client to obtain third-party litigation financing. Often, the government may redact portions of the pleading that it intends to disclose to the defense counsel or for another relevant purpose. Again, the court has the ultimate say on whether to grant the motion for a partial seal lift. Whether third-party litigation financing constitutes good cause – that’s up to the judge.

As for the hypothetical example of counsel requesting a partial seal lift for third-party litigation funding, as the use of third-party litigation funding has proliferated in other types of cases, such as mass torts and class actions, its use in FCA cases that are under seal has received increased scrutiny from the DOJ because in an FCA case, the United States Government remains the main party of interest in the case and is entitled to the greatest recovery under the statute.[22] As previously noted, once a qui tam case is filed, it is under seal and disclosed only to the government. Only the government and/or the court, may decide when to unseal a case – whether partially or fully.

For years, the DOJ has asked both relators and their counsel during a confidential interview to disclose whether any person other than the relator or their counsel have a financial interest in the case. This question not only encompasses third party litigation finance companies, but also “silent partners” and spouses. As one can imagine, if a person was feeding information to a whistleblower in exchange for remuneration premised upon the outcome of the FCA case, it could be problematic for the government’s investigation. In 2020, various high-level DOJ officials gave speeches whereby third-party litigation financing was raised in relation to FCA cases. There are two key take-aways: (1) the DOJ attorneys ask five questions, if the answer to the first question (whether or not there is litigation funding is used) is “yes”, four more questions are asked; and (2) the DOJ may move to dismiss qui tam actions brought by relators who have entered into an agreement with a third-party litigation funder.[23] Once a decision has been made by the government to decline the case and allow the matter to move forward with the relator’s counsel taking primary responsibility for the litigation, then it is incumbent on relator’s counsel to notify the government if they obtain third-party litigation financing. Although the case is no longer under considered under-seal, relator’s counsel should always consider not sharing government correspondence because of joint-prosecutorial privilege, as well as any parallel proceedings (including administrative actions), which may be affected.

On June 25, 2020, the Eleventh Circuit Court of Appeals issued its Opinion in United States ex rel. Angela Ruckh v. Salus Rehabilitation, LLC, et al. – a portion of which addressed third-party litigation funding.[24] Ms. Ruckh, a registered nurse, brought a FCA case against two skilled nursing home facilities, as well as two related entities that provided management services at 53 facilities in the State of Florida.[25] After a jury trial, the district court entered a judgment in favor of Ms. Ruckh, as well as the plaintiffs (the United States and the State of Florida) in the amount of $347,864,285 for the submission of false and fraudulent Medicare and Medicaid claims for payment.[26]

The defendants appealed and one of its claims on appeal was Ms. Ruckh’s October 17, 2017 litigation funding agreement (“Agreement”) with ARUS 1705-556 LLC (“ARUS”) “vitiate[d] her standing to pursue this appeal.”[27] As collateral, she “agreed to sell ARUS less than 4% of her share of the judgment originally entered by the district court, if the jury verdict were upheld on appeal, assuming a 30% share to the relator.” There is also an express provision that ARUS has no power to influence or control the litigation – a fact the court found critical to its decision.[28] The court also acknowledged that the FCA “does not expressly authorize relators it reassign their right to represent the interest of the United States in qui tam actions…[and] [t]he FCA includes a number of restrictions, including on the conduct of qui tam actions and who may serve as a relator. See 31. U.S.C. § 3730.”[29] As addressed in the article, one of the restrictions is the seal.

It is important to note that Ms. Ruckh’s case had already been unsealed before she, with the knowledge of her counsel, entered into a litigation funding agreement. (emphasis added).

Until now, the focus has been on the government and the court; however, attorneys also need to consider both the client and the respective state bar’s professional rules. In Ruckh, the client knew about the terms of the agreement because she was a signatory. In Texas, the State Bar of Texas has specifically held that, “a lawyer may not sell or transfer … accounts receivable owing by the lawyer’s clients or former clients except with the clients’ consent, after consultation with the lawyer, to the disclosure of confidential information incident to such sale or transfer.”[30] In other words, a client is informed and gives consent. If the client does not consent to either the “cost of capital”[31] and/or the information being transferred to a third-party litigation funding company, then a lawyer runs afoul of the rules. It is imperative that co-counsel, whether in an “of counsel” capacity or not, be transparent so that all lawyers can meet their legal and professional obligations.

The State Bar of Texas is not alone in its view. The Ohio Supreme Court’s Board of Commissions on Grievance and Discipline issued an advisory opinion indicating that not only is a lawyer precluded from selling his or her fees at any stage, factoring of specific invoices would likely implicate Rule 1.6 since it would constitute, with almost certainty, the disclosure of confidential or secret information of the client without the client’s consent.[32]

Failure to secure the client’s consent, and in turn failing to notify the government to obtain the court’s permission to partially lift the seal for a specific purpose (and in the case of a third-party litigation financing request made by counsel while a case is under seal, also obtaining the government’s agreement for them to file a motion with the court), may result in a breach of the seal, which could have serious consequences for the attorney(s), the client, and the case.

Potential consequences of the seal breach

In 2016, the United States Supreme Court addressed the issue of whether a seal breach automatically requires the FCA case to be dismissed.[33] In Rigsby, the Relator’s attorney emailed the sealed complaint to the media. The Supreme Court held that dismissal of an FCA case is not automatic, as well as outlining three factors for lower courts to consider when a judge exercises its discretion.[34] The three factors are as follows: (1) the actual harm to the Government, (2) the severity of the violations, and (3) the evidence of bad faith.”[35]

Consider a post-State Farm case where a U.S. District Court applied the State Farm factors to a declined FCA case for the last seven years of its thirteen-year history (the government requested 18 seal extensions) and reduced the award because of an earlier seal breach which resulted in extensive litigation, delay, and government resources.[36] In U.S. ex rel. Bibby v. Wells Fargo Bank, N.A., the relators informed the court that they had previously violated the court’s seal orders in multiple communications with members of the media starting in 2009.[37] This led Wells Fargo to file a motion to dismiss. The court ultimately denied Wells Fargo’s motion to dismiss but imposed monetary sanctions on the relators totaling $1.61 million.[38]

In sum, seal breaches can be costly. A prudent course of action would be to err on the side of caution and avoid an indicium of a seal breach, especially when the government has not been informed and the court has not granted a partial seal lift for a specific purpose.


Healthcare continues to be the top area of enforcement and recovery under the FCA. Relators in healthcare cases range from physicians to healthcare company executives, to nurses, to sales representatives. Becoming a whistleblower takes courage and an understanding of what is expected of him/her throughout the process. Counsel also has professional and legal obligations to the government, the client, and the case in FCA, as well as other sealed and confidential matters, such as Dodd-Frank whistleblower claims. To that end, the seal, as well as the use of litigation funding need to be understood by counsel and clients alike. Counsel should not place their own interests above that of the law or the client’s authority.

As Albert Einstein said – “The only source of knowledge is experience.” In writing this article, hopefully, whistleblowers and counsel (on both sides of the aisle) will have information to make informed decisions so that the experience of all parties is accomplished in accordance with law, equity, and professional ethics.

Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her

[1] False Claims Act, 31 U.S.C. §§ 3729-3733.

[2] DOJ, Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021 (Feb. 1, 2022),

[3] Ibid.

[4] U.S. Department of Justice, The False Claims Act: A Primer, (last visited Feb. 13, 2022).

[5] Ibid.

[6] Fraud Enforcement and Recovery Act of 2009, Pub. L. 111-21 (May 20, 2009).

[7] False Claims Act Amendments of 2021, S.2428 (Jul. 22, 2021),

[8] Supra n. 3.

[9] 31 U.S.C. § 3729(a)(1)(G).

[10] 31 U.S.C. §3730(b)(1),(2).

[11] 31 U.S.C. § 3730(b)(2).


[13] 31 U.S.C. § 3733.

[14] United States ex rel. Howard v. Lockheed Martin Corp., No. 1:99-CV-285, 2007 WL 1513999, at *1 (S.D. Ohio 2007) (quoting United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242, 245 (9th Cir. 1995)) (internal quotation marks omitted).

[15]Am. Civil Liberties Union v. Holder, 673 F.3d 245, 249-50 (4th Cir. 2011) (citing S. REP. No. 99-345, at 24-25 (1986)).

[16] Am. Civil Liberties Union, 673 F.3d at 250.

[17] Supra n. 11.

[18] U.S. ex rel. IIRT, LLC v. Sightline Health, et al., Case No. 3:16-CV-3203 (N.D. Tex.) (illustrating a non-intervened case with the initial complaint filed in November 2016 with final settlement being reached in December 2021); United States ex rel. Medrano and Lopez v. Diabetic Care Rx LLC, d/b/a Patient Care America, et al., Case No. 15-cv-62617 (S.D. Fla.) (illustrating an intervened case which was filed on Dec. 14, 2015 and a settlement was announced by the government on Sept. 18, 2019); United States ex rel. Magee, et al v. Texas Heart Hospital of the Southwest LLP, Case No. 4:16-cv-00717 (E.D. Tex.) (illustrating a declined case that was filed on Sept. 16, 2016 and ultimately settled and terminated on Jan. 6, 2021); United States ex rel. Riedel v. Boston Heart Diagnostics Corp., Cas No. 1:12-cv-01423 (D. D.C.) (illustrating a case that was filed Aug. 28, 2012and ultimately settled and terminated Nov. 21, 2019). See also U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-06-320R, INFORMATION ON FALSE CLAIMS ACT LITIGATION 3 (2006), available at (indicating that the average time for the government to decide whether to intervene or decline a case is three (3) years, which is different from the date of filing to a potential case resolution).

[19] 31 U.S.C. § 3730(b)(3).

[20] An order “partially unsealing” a qui tam complaint usually enables the government to disclose the complaint to the defendant or a state court in a parallel proceeding (e.g., employment claim involving the whistleblower) with the caveat that the complaint “remain under seal” and not be disclosed publicly until the federal judge issues an order.

[21]See, e.g., United States ex rel. Johnson v. Walmart Stores, Inc., 13 Civ. 2277 (E.D. Cal. May 8, 2015) (“The complaint and all other filings shall remain under seal, except insofar as the seal has been partially lifted by this Court.”); United States ex rel. Creekside Hospice II, LLC, 13 Civ. 167 (D. Nev. Sept. 23, 2013) (“AND FURTHER ORDERED that the seal shall remain in place in all other respects.”); United States and The State of Tennessee, ex rel. Dennis Dodson, Case No. 1:11-cv-182, Dec. 12 (M.D. Ten. Mar. 19, 2012) (“In addition, the seal on the case is PARTIALLY LIFTED for the limited purposes described by the Movants in their motion.”);United States ex rel. James Moran v. Automotive Testing Laboratories, Inc., 98 Civ. 825 (S.D. Ohio Dec. 16, 2004) (“It is HEREBY ORDERED that the United States’ application for partial lifting of the seal is granted and the United States is permitted to disclose the relator’s complaint to Defendant Automotive Testing Laboratories, Inc.; ... IT IS FURTHER ORDERED that, except as provided herein, the record in this lawsuit, including this Order and the United States’ Unopposed Application for Partial Lifting of Seal and Motion for Four Month Extension of Time to Make Election Whether to Intervene and Memorandum in Support, shall remain under seal until further order of this Court.”).

[22] False Claims Act, 18 U.S.C. § 286, 18 U.S.C. § 287, and 31 U.S.C. §3729, et seq., (“In these suits, the government is the real party in interest, and thus is considered the plaintiff.”).

[23] D. Pivnick, B. Barnett, Updates on Third Party Involvement in Litigation Funding for FCA Cases (Oct. 26, 2020), (noting that the other four questions include identifying the funder; whether the relator or counsel has shared information relating to the qui tam allegations with the funder; the existence of a written agreement; and whether the agreement entitles the funder to exercise any direct or indirect control over the relator’s litigation or settlement decisions).

[24] United States ex rel. Angela Ruckh v. Salus Rehabilitation, LLC, et al., Case No. 8:11-cv-01303 (11th Cir. 2020),

[25] Id.

[26] Id.

[27] Id. at 16.

[28] Id. at 20.

[29] Id. at 20-21.

[30] Opinion No. 655, May 2016, 79 Tex. B.J. 470 (2016).

[31] S. Francis Ward, Risky Business, ABA Journal, p. 54 (Jan.-Feb. 2022) (highlighting that “[t]he loans are nonrecourse, so if the case or cases go south or the attorney breaks the agreement, the funder loses its investment” [ and] “if the litigation is successful, the return on investment could be between 200% and 400%[.]”).

[32] Sup. Ct. of Ohio, Board Of Commissioners on Grievances and Discipline, Informal Op. 2004-2 (2004).

[33] State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, 580 U.S. __ (2016),

[34] State Farm, 580 U.S. at p. 6, It’s also important to remember that judges are human and at times, his/her perspective and ultimate decision is worth contesting and/or appealing.

[35] Id.

[36] United States ex rel. Bibby v. Wells Fargo Home Mortg. Inc., 369 F. Supp. 3d 1346 (N.D. Ga. 2019).

[37] United States ex rel. Bibby v. Wells Fargo Home Mortg. Inc., 76 F. Supp. 3d 1399, 1404 (N.D. Ga. 2015).

[38] United States ex rel. Bibby v. Wells Fargo Home Mortg. Inc., 2015 SL 12850572, at *1 (N.D. Ga. Feb. 26, 2015).

Related Videos
Ike Devji, JD and Anthony Williams discuss wealth management issues
Ike Devji, JD and Anthony Williams discuss wealth management issues
Victor Bornstein gives expert advice
Victor Bornstein gives expert advice
Victor Bornstein gives expert advice
Victor Bornstein gives expert advice
© 2024 MJH Life Sciences

All rights reserved.