Divided 4th Circuit backs secrecy provision in whistleblower law

Tuesday, March 29, 2011

RICHMOND, Va. — A divided appeals court upheld the secrecy provision of a federal whistleblower law yesterday, declaring that it serves the compelling government interest of protecting the integrity of investigations.

The 2-1 ruling by a 4th U.S. Circuit Court of Appeals panel rejected the American Civil Liberties Union's claim that the secrecy mandate undermines the nation's open court system and violates the right to free speech. The decision in ACLU v. Holder affirmed U.S. District Judge Liam O'Grady's decision to dismiss the lawsuit.

The dispute involves the False Claims Act, which allows citizens to collect damages for reporting contract fraud against the U.S. government. The Civil War-era law was amended in 1986 to require that such complaints remain under seal for at least 60 days while the government investigates. The secrecy is intended to prevent tipping off an alleged fraudster to an investigation.

The sealing order can be extended if the Justice Department demonstrates it needs more time, and the ACLU claims the government has used that tactic to keep allegations of Iraq war profiteering and other fraud hidden from the public, sometimes for years. However, the appeals court's majority said the law is narrowly tailored to balance the government's investigative needs against the need for public access to court documents.

The court also rejected the ACLU's claim that the law infringes on the First Amendment rights of those who file complaints by saying they can't collect damages if they tell the public what they have done. The majority said those citizens are free to talk about “the underlying fraud” — they just can't mention that they've filed a False Claims Act action.

Judge Roger Gregory wrote in a dissenting opinion that such blanket secrecy is unconstitutional, and that judges should decide whether to seal complaints on a case-by-case basis.

“In today's era of growing debts and deficits, the FCA's lack of transparency has especially stark fiscal implications,” he wrote. “Instead of striving to categorically conceal this area of civil dockets, I would more rigorously apply the First Amendment and selectively seal records.”

ACLU attorney Christopher A. Hansen said he was disappointed in the ruling, but no decision had been made on whether to appeal.

“I thought the dissent was strong and persuasive,” he said.

The Department of Justice had no comment, said spokesman Charles Miller.

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