Developments in the Courts

• Supreme Court Accepts Case Concerning Deadline for Notices of Appeal in Cases in Which the United States Does Not Intervene. On Friday, January 16, 2009, the Supreme Court granted certiorari in United States ex rel. Eisenstein v. City of New York, No. 08-660, which poses the question whether, when the United States declines to intervene in a qui tam suit, and the case is dismissed, does the plaintiff get 30 days to file a notice of appeal, as provided under Federal Rule of Appellate Procedure 4(a)(1)(A), or 60 days, as is true when the "the United States or its officer or agency is a party," per Federal Rule of Appellate Procedure 4(a)(1)(B). The Second Circuit held, in accord with the Tenth Circuit but in conflict with the Fifth, Seventh, and Ninth Circuits, that the 30-day limit applies and that Eisenstein's appeal was therefore untimely. The petition argues that even in cases in which the United States declines to intervene, the United States remains a genuine party in interest, with a financial stake in the outcome and the right to intervene at a later point. New York City, which was supported by the United States as an amicus in the Second Circuit, contends that the Second Circuit's decision was correct because the United States' lack of participation in the case once it has declined to intervene means that it is not a party for purposes of Federal Rule of Appellate Procedure 4(a)(1). The Supreme Court will likely hear argument in the case in April.
• Supreme Court Calls for Views of the Solicitor General in Case About Public Disclosure Bar and State Administrative Reports. On December 8, 2008, the Court asked the Solicitor General to weigh in on the certiorari petition filed in Graham County Soil & Water Conservation District v. United States of America ex rel. Wilson, No. 08-304, which raises the question whether an auditing report commissioned by a state agency constitutes a public disclosure sufficient to bar a subsequently filed qui tam action. 31 U.S.C. § 3730(e)(4)(A) provides: "No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information." The Fourth Circuit held that the state-commissioned audit report did not qualify as a disclosure because only federal administrative reports qualify. The Obama Administration will now have to file a brief expressing the Federal Government's view, which may provide early insights into the Administration's views on broader FCA issues as well. If the Administration urges the Court to review the case, that will significantly increase the odds that the Court will do so. But, whatever the new Administration's view on the merits, it may well encourage the Court to hold off in order to let additional lower courts address the question first.
• ACLU Files Constitutional Challenge to FCA Seal Provision. On January 15, 2009, the American Civil Liberties Union, OMB Watch, and the Government Accountability Project filed a suit in the Eastern District of Virginia contending that FCA's requirement that qui tam complaints be filed under seal violates the First Amendment rights of relators by effectively gagging them from speaking out while the Government decides whether to intervene and runs afoul of the separation of powers by denying the federal courts the ability to control on a case-by-case basis the matters that will be held under seal. The suit's legal theories seem unlikely to prevail, but the initiation of the action may well be part of a broader push for more vigorous use of the FCA against Iraq War contractors and part of a campaign to amend the FCA's seal provisions, which were added in 1986. The complaint can be found here.

Developments in Congress. The False Claims Act Correction Act, which would make a number of pro-plaintiff changes to the FCA (see our earlier alert), was not enacted in the 110th Congress. It was reported out favorably by the Senate Judiciary Committee on September 25, 2008, but did not reach the floor in either the Senate or the House. Its principal sponsors, Senator Grassley and Representative Berman, are likely to re-introduce the bill in the new Congress that has just convened. Its odds of moving forward may be substantially increased, given the expanded Democratic majorities in both Houses and the increasing calls that have been heard for greater vigilance about fraud in Iraq War contracts.