State Farm Fire and Casualty Company v. United States ex rel. Rigsby
Issues
What are the consequences of violating the False Claims Act’s seal requirement?
Cori and Kerri Rigsby sued State Farm Fire & Casualty Company under the False Claims Act (“FCA”), alleging that State Farm defrauded the federal government while paying out claims related to the damage caused by Hurricane Katrina. The district court and the Fifth Circuit found that the Rigsbys’ attorney violated the FCA’s seal requirement by distributing documents to several news outlets, but declined to dismiss the Rigsbys’ suit after applying a three-part balancing test to evaluate whether dismissal was warranted. The Supreme Court granted certiorari to resolve the circuit split over what standard governs the decision to dismiss a relator’s claim for violation of the FCA’s seal requirement. The United States, on behalf of the Rigsbys, points to the FCA’s test, structure, legislative history, and purpose, to argue that only discretionary sanctions apply to a violation of the seal requirement. State Farm maintains that a violation of the seal requirement must result in mandatory dismissal of the suit, rather than a discretionary balancing test. This decision may affect the prevalence of qui tam FCA suits and the government’s ability to recover from defrauding parties.
Questions as Framed for the Court by the Parties
What standard governs the decision whether to dismiss a relator’s claim for violation of the False Claims Act’s seal requirement, 31 U.S.C. § 3730(b)(2)?
In the aftermath of Hurricane Katrina, State Farm Fire & Casualty Company (“State Farm”) participated in the National Flood Insurance Program’s “Write Your Own” Program. See United States ex rel. Rigsby v. State Farm Fire & Casualty Company, 794 F.3d 457, 463 (5th Cir. 2015). This program allows private insurance companies to offer government-backed flood insurance policies to geographic areas where it would otherwise not be economical to do so.
Written by
Edited by
Additional Resources
- Amy Howe, One New Grant, One CVSG, Two Summary Reversals, SCOTUS Blog (May 31, 2016).
- Greg Stohr, State Farm Gets U.S. High Court Hearing in Katrina Billing Case, Bloomberg (May 31, 2016).
- Evan Panich, Does Violation of the Seal Requirement Require Dismissal? Supreme Court Will Decide, McDermott Will & Emery (June 2, 2016).