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Maintaining Anonymity in False Claims Suits

Clients are often understandably concerned about protecting their identity in the process of filing a whistleblower case. Many would like to file cases anonymously in order to protect against the potential for retaliation from their company and preserve their standing within a professional community. Unfortunately, under the False Claims Act, such protection is limited.

Even with the recent increased focus on whistleblowers and whistleblower rights, the fact is that an individual whistleblower can face great obstacles, both personal and professional, when their identity is revealed. Protection of the whistleblower’s identity is in the public interest because that makes it more possible for a whistleblower to provide information to the government about fraud and is also likely to result in the government collecting more money from those who would commit fraud.

Publicity about the SEC and CFTC whistleblower reward laws, which include specific provisions allowing for anonymous filing of whistleblower claims, has created even more interest in protecting a whistleblower’s identity in all kinds of cases. So far, the SEC and CFTC have succeeded in protecting whistleblower identities even in cases when the whistleblower has won an award. However, the SEC and CFTC whistleblower regulations do not include a private right of action on behalf of the government.[1] They provide important rights for a whistleblower to use, but they do not provide the same robust cause of action as the False Claims Act.

The unique procedure of a False Claims Act case does provide some protection for whistleblowers. For an initial period of time while a case is under seal nothing about the case will be public. The seal allows the government to investigate these claims before agreeing or declining to pursue a case. It also can provide a great deal of protection to the whistleblower, who must also abide by the seal and not reveal the existence of the case.

Once a case is out of seal, it proceeds similarly to most other traditional court cases, and, therefore, the law does not appear to provide more rights for the whistleblower to remain anonymous than the rights provided to other plaintiffs in more traditional causes of action. Indeed, whether an individual fears ridicule, losing a job, or even physical harm, it is not likely that a whistleblower’s identity will remain hidden once the government decides that it is time to unseal a case.

This is because the right to keep documents under seal, confidential, and unavailable to the public is generally considered to be the government’s right, not that of the whistleblower (or relator).[2] This rule is predicated on the fact that the government cannot allow sensitive information regarding an investigation to be made public, as doing so could tip off the wrongdoers or otherwise hinder the outcome of the inquiry.[3] The right to keep proceedings under seal and to extend the seal for good cause shown is spelled out under the Act. It is clearly stated to allow the government, but not the relator, to move for an extension of the seal.[4]

In addition, the “paramount importance of open courts”[5] creates a presumption “that plaintiffs will use their true names.”[6] Thus, only in rare cases will pseudonyms be permitted “to protect a person from injury or harassment.”[7] Even if a case does remain under seal (or a pseudonym is used) a whistleblower’s identity can still be revealed if the case goes to alternative dispute resolution or is settled.

A recent U.S. District court decision[8] illustrates the traditional presumption (and current public sentiment) that remaining anonymous undermines transparency and can ultimately harm the public’s interest.  In this case, the government alleged that Biotronik, a medical supply company, provided kickbacks to physicians in order to increase sales of the Defendant’s cardiac management devices in patients who did not necessarily need them.[9] Biotronik sought to keep these allegations under seal, arguing that public exposure could reveal confidential business information and or harm the reputation of Biotronik and/or the physicians allegedly accepting inducements.[10]

In denying Biotronik’s motion to keep the above information under seal, the court balanced the public interest against the defense’s reasons for secrecy.[11] Ultimately, it was unclear if unsealing Biotronik’s name and information would have any material effect on their business at all. Additionally, the court held that allegations against individual physicians in the case did not warrant sealing either.

Most importantly, for our purposes, the Relator, who originally filed as a “John Doe,” joined the motion with Biotronik in a request for anonymity. The relator argued that revealing his identity would bar him from ever being employed in the pharmaceutical industry again.[12] The court found this argument untenable, holding that the relator should accept the risk that his identity could be revealed when an action is initiated.[13] The court went on to say that discretion is retained to balance the relator’s need for anonymity against prejudice to the defendant and the public’s interest in the party’s identity.[14] Therefore, from the court’s perspective, there was inconclusive evidence in the relator’s case, to justify “reasonable or particular vulnerability to retaliation,”[15] which, if proven, may have caused the records to be sealed. The case was ultimately settled out of court and the joint motion for both parties to seal their respective identities was denied. It would be unusual, to say the least, for a plaintiff-relator to be able to have the support of a defendant in moving that their identity remain anonymous. Yet even here, and with that support, the relator’s identity was revealed.

This case follows the long-standing presumption that whistleblowers should reveal their identity to the accused parties and to the public at large. There is, however, a recognized exception to this rule if the plaintiff can satisfy the court in a five-factor test, which includes:

  • Severity of the threatened harm,
  • Reasonableness of the anonymous party’s fears,
  • The anonymous party’s vulnerability to retaliation,
  • Prejudice to the opposing party and
  • The public interest.”[16]

Except in the most extraordinary cases, it is difficult for relators to fulfill all of the above factors to the Court’s satisfaction. Courts may also point to relief available to whistleblowers under section 3730(h) of the False Claims Act for traditional employment-based retaliation. This provision of the False Claims Act is available to allow whistleblowers to sue for retaliation and provides the basis for a panoply of rights. Nonetheless, suing to recover damages occurring as a result of retaliation is rarely as good as protection from retaliation. Obtaining such actual protection is difficult under the law.  The existence of this provision does not change the fact that a perceived harm or the potential for such harm is going to have to be extraordinary to allow a whistleblower to remain anonymous under a False Claims Filing.

For these and many other reasons, whistleblowers who want to file a case under the False Claims Act should be prepared for the likelihood that their identity will be public at some point. Still, it is not all bad news. The seal provision of the Act does work to protect the whistleblower for some considerable period of time. Investigations commonly take a considerable amount of time, which provides a whistleblower with the opportunity to move on and find new employment.  Most cases that are declined and withdrawn do become public record, but are currently very difficult to find, making it a little less likely that a whistleblower’s identity will be fully exposed when a case is not successful. Nonetheless, whistleblowers bringing a case under the False Claims Act should prepare themselves for the likelihood that their name will ultimately be public in the matter.

*Winfield Glascock is a licensed Solicitor in New South Wales, Australia. He is currently working on False Claims Act, IRS, SEC, and CFTC whistleblower actions.

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[1] All three laws include the right to sue for retaliation committed against the whistleblower directly, but only the False Claims Act allows a whistleblower to sue in Court on behalf of the government. Under the SEC and CFTC, a whistleblower provides information to the Agency and stakes a claim to an award only if the Agency acts on the information.

[2] 31 U.S.C. §3730 (b) (2), (3)

[3] S. REP. 99-345, 1986 U.S.C.C.A.N. 5266, Pg. 5

[4] 31 U.S.C. §3730 (b) (2), (3)

[5] Doe v. Kamehameha Schs./Bernice Pauahi Bishop Estate, 596 F.3d 1036, 1046 (9th Cir. 2008)

[6] Ibid

[7] United States v. Stoterau, 524 F.3d 988, 1012 (9th Cir. 2008) (quoting United States v. Doe, 488 F.3d 1154, 1156, n.1 (9th Cir. 2007)

[8] United States of America, et al., ex rel John Doe Relator v. Biotronik, Inc., et al., No. 2: 09-cv-3617 KJM EFB

[9] Ibid, Pg. 2

[10] Ibid

[11] Ibid, Pg. 6

[12] Ibid, Pg. 9.

[13] Ibid

[14] Ibid

[15] Ibid Pg. 10

[16] Kamehameha, 596 F. 3d at 1042 (quoting Advanced Textile, 214 F.3d  at 1068)