Federal Court Finds Qui Tam Claimants Cannot Seal Agreement to Share Settlement

drew-hays-206414-200x300In the case of Fair Laboratory Practices Associates v. Riedel, the U.S. Court of Appeals for the 3rd Circuit determined that a qui tam settlement sharing agreement between two claimants did not need to be placed under seal. This is important information for claimants who want to make private agreements to split the proceeds of qui tam cases against the same defendants.

If you are involved in a qui tam lawsuit or believe you have the evidence to bring one, yet you know there are also similar actions in process against the same person, contact an experienced California qui tam attorney from Brod Law Firm right away.

Fair Laboratory Practices Associates v. Riedel

In 2010, Hunter Laboratories and the Fair Laboratory Practices and Associates (FLPA) created a qui tam settlement sharing contract under which they would each share in the proceeds of their respective qui tams suits against Quest Diagnostics Incorporated (QDI) and other labs. Then in 2011, the FLPA and NPT Associates brought a qui tam action against QDI in New York. However, it was dismissed due to professional conduct violations. That same year, Hunter Laboratories and Chris Riedel settled a qui tam action they brought against QDI in California.

The FLPA claimed that Hunter owed it 15% of the proceeds from this settlement. Hunter denied to pay the FLPA based on the fact that its own case was dismissed. This led to the FLPA suing Hunter in the District of New Jersey based on its alleged right to a portion of the qui tam settlement. The district judge’s decision favored the FLPA, stating that the dismissal of its own qui tam action did not breach the settlement sharing contract made with Hunter.

Should the Settlement Agreement be Placed Under Seal?

Months later, the FLPA and Hunter came to their own agreement to remit payment to the FLPA. The district court vacated its judgement and required the parties to file the agreement with the court, which they did, under seal.

Issue arose when QDI tried to join intervene in the case and oppose the sealing of the settlement agreement. The trial court denied QDI’s request to intervene and allowed the settlement to be sealed. QDI appealed, and the Third Circuit ultimately agreed that the settlement agreement did not need to be sealed from the public. Instead, confidential information could simply be redacted and the rest of the agreement could be made public record.

The appellate court found that there was no particularly harm that would likely result from the settlement agreement being public record and that the public had a valid interest in learning why a court would vacate a judgment and then seal a settlement that was said to simply confirm the judgment, The Legal Intelligencer reported.

Do You Have Information About a Fraudulent Claim Against the Government?

If you believe you have information that a person or business made a false claim to the government in order to receive or retain money that rightfully belonged to the government, then you should contact Brod Law Firm as soon as possible. Under the False Claims Act, you can bring an action against that party on behalf of the government. The government may or may not intervene, but if it or you are ultimately successful, you can receive part of the settlement or jury award.

(image courtesy of Drew Hays)