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United States ex rel. Villare v. Sultan

United States District Court, Third Circuit

January 8, 2014

WAMIQ S. SULTAN, et al., Defendants.


JEROME B. SIMANDLE, Chief District Judge.

Plaintiff-Relator Robert C. Villare, M.D., ("Relator") brings this motion to voluntarily dismiss this qui tam suit, which alleges violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq., and the New Jersey False Claims Act, N.J.S.A. §2A:32C-1 et seq., and to place a permanent seal over the case, or, in the alternative, to file a redacted version of the Amended Complaint. [Docket Item 12.] For the reasons explained below, the motion to dismiss without prejudice will be granted, and the motion to seal or file a redacted Amended Complaint will be denied.

1. Relator filed this action on December 28, 2011, alleging various false claims offenses against the Memorial Hospital of Salem County ("Salem County Hospital"), two physicians, and a physicians' group. [Docket Item 1.] The Court placed the pleadings under temporary seal, pursuant to 31 U.S.C. § 3730(b)(2) & (b)(3), and L. Civ. R. 5.3. [Docket Item 3.] Relator filed an Amended Complaint [Docket Item 8], and in October 2013, the United States declined to intervene in the matter. [Docket Item 10.] Relator no longer wishes to pursue these claims and moves for voluntary dismissal, with the consent of the United States and New Jersey.

2. The FCA provides that an action brought in the name of the government "may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting." 31 U.S.C. § 3730(b)(1). The New Jersey False Claims Act similarly provides that an action "may be voluntarily dismissed by the person bringing the action if the Attorney General gives written consent to the dismissal along with the reason for consenting, and the court approves the dismissal." N.J.S.A. § 2A:32C-5c. Plaintiff has obtained and submitted written consent from the U.S. Department of Justice and the Office of the Attorney General of New Jersey. Relator having satisfied the statutory requirements, the Court will grant Relator's unopposed motion to dismiss this action without prejudice.

4. The temporary seal in a qui tam suit ordinarily is lifted after the government declines to intervene, because the purpose of sealing the materials is to provide the government sufficient time to investigate the allegations and determine whether to intervene.[1] Federal courts generally decline to place FCA case materials under permanent seal, even if the government declines to intervene and the relator moves for voluntary dismissal. See United States ex rel. Grover v. Related Cos. LP, ___ F.Supp.2d ___, No. 11-1861, 2013 WL 6037213, at *6 (D.D.C. Nov. 14, 2013) (granting voluntary dismissal but denying the accompanying motion to seal the docket); United States ex rel. Eberhard v. Angiodynamics, Inc., No. 11-556, 2013 WL 2155327, at *3 (E.D. Tenn. May 17, 2013) (declining to seal the docket "in light of the strong presumption favoring access to public records" after the state and federal governments declined to intervene and the relator moved for voluntary dismissal); United States ex rel. Wenzel v. Pfizer, Inc. , 881 F.Supp.2d 217, 222 (D. Mass. 2012) (denying the relator's request to maintain the seal after the government declined to intervene and the relator moved for voluntarily dismissal); Littlewood , 806 F.Supp.2d. at 842 (same); United States ex rel. Ruble v. Skidmore, No. 09-549, 2011 WL 5389325, at *4 (S.D. Ohio Nov. 8, 2011) (same); United States ex rel. Durham v. Prospect Waterproofing, Inc. , 818 F.Supp.2d 64, 69 (D.D.C. 2011) (same); United States ex rel. Herrera v. Bon Secours Cottage Health Servs. , 665 F.Supp.2d 782, 785-86 (E.D. Mich. 2008) (same); United States ex rel. Dahlman v. Emergency Physicians Prof'l Ass'nb, No. 02-590, 2004 WL 287559, at *1-*2 (D. Minn. Jan. 5, 2004) (same); cf. United States ex rel. Permison v. Superlative Techs., Inc. , 492 F.Supp.2d 561, 562-64 (E.D. Va. 2007) (denying the relator's motion to reseal an FCA action, which had been unsealed after the government declined to intervene, when the relator sought to nonsuit the matter); United States ex rel. Reeves v. Merrick & Co., No. 11-430, 2012 WL 8527783, at *1-*2 (E.D. Tenn. Sept. 14, 2012) (denying the government's request to maintain a permanent seal after the government declined to intervene and consented to the relator's voluntary dismissal of the complaint).

5. At the same time, "the general rule in favor of unsealing is subject to the privacy rights of participants and third parties." Wenzel , 881 F.Supp.2d at 221. Here, Relator requests that all filings in this matter remain under seal, pursuant to L. Civ. R. 5.3(c), because the Realtor is currently on staff at the Salem County Hospital and fears retaliation and blacklisting because of his whistleblowing activity. (Rel's Mot. Br. at 4.) Relator's concern "stems from personal observations in other, similar circumstances in the healthcare industry, " and he assures the Court that his fears "are not without reason or support." (Id. at 4-5.) Relator asserts that if the seal were lifted, his "position and livelihood" would be put "at risk, and it would be virtually impossible for Relator to secure any future staff position in this regional area." (Id. at 5.) Relator does not plan to retire "in the near future" and raises concern about the fact that the "hospital industry is increasingly dominated by a small number of companies" that "closely monitor the outcome of whistleblower cases' in the industry and are keenly aware of the participants in these cases." (Id.) Relator observes that neither the United States nor the state of New Jersey opted to intervene and asserts that "the public has no strong interest in knowing allegations contained within the Amended Complaint." (Id.) Relator concludes that there is no reason to subject him to the risk of financial or reputational harm, given Relator's motion to voluntarily dismiss the action, and, as there is no prejudice to the defendants, he requests that the materials remain under permanent seal. (Id.) The United States, in its letter consenting to voluntary dismissal, opposes the sealing of the Amended Complaint.

6. L. Civ. R. 5.3 provides that the movant seeking to seal materials must describe

(a) the nature of the materials or proceedings at issue, (b) the legitimate private or public interests which warrant the relief sought, (c) the clearly defined and serious injury that would result if the relief sought is not granted, and (d) why a restrictive alternative to the relief sought is not available.

L. Civ. R. 5.3(c)(2). There is a strong presumption in favor of public access to judicial records. In re Cendant Corp. , 260 F.3d 183, 194 (3d Cir. 2001); Republic of Phillippines v. Westinghouse Elec. Corp. , 949 F.2d 653, 659-60 (3d Cir. 1991); Bank of Am. Nat'l Trust & Sav. Ass'n v. Hotel Rittenhouse Assocs. , 800 F.2d 339, 343 (3d Cir. 1986) (citing Nixon v. Warner Comms., Inc. , 435 U.S. 589, 597 (1978)). The presumption attaches when judicial records are filed with the Court, United States v. Smith , 123 F.3d 140, 156 (3d Cir. 1997), and may be overcome only if the movant shows that "the need for confidentiality outweighs this strong presumption...." United States v. Wecht , 484 F.3d 194, 208 (3d Cir. 2007).

7. Here, assuming for the moment that Relator can meet the first three requirements of L. Civ. R. 5.3(c)(2), Relator has not satisfied the fourth requirement. Relator's own motion describes the availability of a less restrictive alternative to the relief sought - partial redaction - and because the FCA does not contemplate a permanent seal, Relator's motion seeking a permanent seal must be denied. Relator proposes, in the alternative, that the Court grant him leave to file a partially redacted Amended Complaint, removing Relator's name and identifying information and preserving for the public docket all of the allegations of fraud. (Rel's Mot. Br. at 6.) He contends that "[w]hatever public interest in the matter exists could be satisfied by the impending unsealing of Relator's Redacted Amended Complaint." (Id. at 7.) Relator argues that revealing his identifying information on the public docket "would have a chilling effect on future whistleblowers." (Id.)

8. Courts likewise consistently deny relators' motions to file and unseal redacted versions of FCA case materials. See Grover, 2013 WL 6037213, at *5 ("redacting the Complaint before it is unsealed would permit relators to assume all of the advantages of bringing an FCA claim without bearing any of the risks"); Eberhard, 2013 WL 2155327, at *3 ("merely removing the relator's name will not assure that defendant cannot identify who the relator is, and removing all identifying information is tantamount to sealing the case"); Wenzel , 881 F.Supp.2d at 222 (denying the request to redact because extensive redactions would be necessary to "sufficiently preserve Wenzel's anonymity, " which would be "contrary to the presumption in favor of public access" and "would also enable future FCA suits against [the defendant] for similar conduct that would otherwise be prevented under the FCA's public disclosure bar"); Ruble, 2011 WL 5389325, at *4 (denying the alternative request to redact all identifying information); Herrera , 665 F.Supp.2d at 786 (denying the request to unseal redacted documents because redaction would be "tantamount to maintaining a permanent seal" and because "nothing in the FCA... supports... a permanent seal of a qui tam complaint"); Permison , 492 F.Supp.2d at 565 (E.D. Va. 2007) (denying the request to redact the complaint because "it would essentially require the resealing of the complaint, which, as stated above, is unwarranted"). Among the rationales for denying redaction is the fact that if relators were willing to sacrifice anonymity when they stood to gain financially from a successful prosecution, the relators may not now claim that their privacy interests outweigh the benefits of public disclosure. See Grover, 2013 WL 6037213, at *5 ("It is the Relator himself who decided to file the Complaint and he was willing to disclose his identity to the public when he stood to gain financially") (internal quotation marks omitted); Wenzel , 881 F.Supp.2d at 223 ("Wenzel took a calculated risk and this Court will not shield him from the consequences.");, Littlewood , 806 F.Supp.2d at 842 ("Having assumed the risk that the Government might not intervene, the relator cannot cherry pick the portions of the FCA that suit her."); Durham , 818 F.Supp.2d at 68 ("When Relator filed his Complaint, his purpose was for his allegations to be the basis of a potential trial.").

9. Relator may have a plausible fear that harm will befall him, but the harm remains speculative. See Permison , 492 F.Supp.2d at 564 ("where a whistleblower sets forth potentially damaging allegations about a company in the industry where he continues to work, such fear is not implausible.... Yet such an amorphous retaliation concern will not suffice to warrant resealing the complaint."). Each justification that Relator advances in favor of redaction has been rejected consistently by other courts. For instance, courts have rejected the argument that redaction is needed because relator remains employed by the defendant or works in the same community or industry.[2] Courts have rejected the argument that the relator would be revealed as a whistleblower and suffer retaliation or some other harm.[3] Likewise, courts have rejected the argument that, because the government declined to intervene and because the case will be dismissed, there is no public interest in the allegations, [4] or that unsealing the case might have a chilling effect on future whistleblowers.[5] Relator has provided the Court no persuasive reason to depart from these precedents here.[6] Relator has not submitted any evidence to support his assertions that serious injury would result from unsealing this case. See Eberhard, 2013 WL 2155327, at *3 ("While the relator asserts that there may be retaliation against him by either defendant's directly talking to his employer or his customers, he has not submitted any evidence to support this assertion."). A litigant may not seek to redact documents merely by alleging the possibility of generalized professional or economic harm when he or she is the one who engaged the issue before the court initially.

10. In deciding this motion, the Court must weigh competing public interests. On one hand, weighing in favor of unsealing the docket, there is a significant public interest in exposing allegations of fraud, both as a deterrent to those committing, or those who would commit, fraud and to those who would bring baseless qui tam suits for inappropriate reasons. While no allegations have been proven in this case, courts do not ordinarily seal case materials in actions that turn out to be frivolous or baseless or which are dismissed. The present case is not one in which the Relator filed a suit and shortly thereafter thought better of it and seeks to withdraw and seal his unreviewed allegations. Here, Relator filed a suit and successfully moved to amend his claims three months later. Relator's allegations have commanded the time and effort of both state and federal officials and provoked their responses. The case has occupied space on this Court's docket for more than two years. There is a strong interest in revealing to the public those matters which have been the subject of extensive review by the government and the Court, particularly when those allegations involve the misuse of taxpayer dollars.

11. On the other hand, there undoubtedly is a public interest in encouraging individuals to come forward with allegations of fraud that otherwise might go undetected. The Court recognizes the risk that Relator assumed in asserting these allegations and appreciates the public function that whistleblowers serve. However, Congress did not provide a mechanism in the FCA for a permanent seal and appears to have concluded that the possibility of a significant payout to relators outweighs the chilling effect disclosure would have on potential whistleblowers. The Court has no basis to conclude that the incentive structure in the FCA insufficiently encourages individuals to bring qui tam suits, even if complaints are unsealed. The very fact that courts repeatedly reject this chilling-effect argument is some evidence that relators are undeterred by the common practice and expectation of unsealing dockets.

12. The Relator is statutorily protected from retaliation. As other courts have observed, the FCA provides a cause of action for employees who suffer retaliation for filing qui tam suits, minimizing, to some extent, the consequences of unsealing the Complaint for Relator. See, e.g., Herrera , 665 F.Supp.2d at 786 (stating that the relator is not without recourse for relation because the FCA provides a cause of action for retaliation) (citing Permison , 492 F.Supp.2d at 564). The FCA provides:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this chapter.

31 U.S.C. § 3730(h)(1). Relief for retaliation includes

reinstatement with the same seniority status that employee, contractor, or agent would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees.

§ 3730(h)(2). The retaliation concerns here are no different from those of any other employee who sues his or her employer, and Relator has not raised a persuasive argument why his privacy concerns warrant special consideration in the FCA context. See, e.g., Grover, 2013 WL 6037213, at *4 ("Relator's concerns are no different from those of the many employees who bring suits against their employers or former employers"); Durham , 818 F.Supp.2d at 68 (stating that "retaliation concerns are similar to those of the many other employees who bring suits against their employer...' and therefore should not merit special protection in qui tam actions") (quoting Littlewood , 806 F.Supp.2d at 841-42).

13. Relator argues that retaliation cases can be difficult to prove and retaliation may occur in subtle ways that would leave him effectively no recourse. He argues that only a permanent seal offers true protection for an employee who comes forward in good faith to expose a potential fraud. However, as noted, Congress considered the risks to relators and provided incentives necessary to overcome those risks, without providing for a permanent seal. The "mere possibility, or even plausibility, of some form of economic harm is inadequate to depart from the rule favoring public access, particularly in the absence of any concerns involving national security, trade secrets or personal safety." Eberhard, 2013 WL 2155327, at *3. Relator chose to assert allegations of fraud in a lawsuit and stood to gain financially from a successful suit. His decision to withdraw his claims now does not entitle him to anonymity. That the Relator has raised, and this Court has memorialized, his concerns about plausible retaliation should itself serve as a deterrent, in addition to the statutory protections of 31 U.S.C. § 3730(h)(1) & (2), supra. For these reasons, and those repeatedly invoked in the overwhelming case law on this point, the motion to file and unseal a redacted Amended Complaint is denied.

14. The Court thus finds that the Relator, as the party seeking to seal the docket, has not demonstrated a particular need to protect himself from plausible retaliation for whistleblower activity sufficient to overcome the strong public interest in an open court docket and the presumption of the False Claims Act that a docket be unsealed after the government has determined whether it will intervene.

15. The United States, in its Notice of Election to Decline Intervention, requests that the Notice, the Complaint, and the Court's forthcoming Order be unsealed but that

[a]ll other contents of the Court's file in this matter (including, but not limited to, any applications filed by the United States for an extension of the sixty-day investigative period or for any other reason, oppositions filed by the United States in response to the Relator's motions, reply briefs, memoranda, and supporting documents) should remain under seal and not be made public or served upon the defendants.

[Docket Item 10.] The government references this request again in its letter consenting to voluntary dismissal. The government did not file a motion to seal and did not otherwise explain why other case materials must remain sealed. A review of the docket shows that the United States filed one application to stay and administratively terminate this action, which contains little more than boilerplate language. The application contains no discussion of confidential information, investigative techniques or information that would injure nonparties or jeopardize any other investigation. See Littlewood, 806 F.Supp.2d at 843 (discussing appropriate reasons to decline to unseal filings upon request of the government) (citing United States ex rel. Mikes v. Straus , 846 F.Supp. 21, 23 (S.D.N.Y. 1994)). There being no reason to keep the government's application under seal, and to the extent the government's submission could be construed as a motion to seal, the request is denied.

16. The Court will direct the Clerk of Court to maintain all case materials under temporary seal for 14 days to permit Relator time to appeal this decision or otherwise move to stay the unsealing of this docket. An accompanying Order will be entered.

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