State Farm Fire & Casualty Co. v. United States ex rel. Rigsby

In 2006, sisters Cori and Kerri Rigsby filed a qui tam lawsuit against State Farm Fire & Casualty Co., alleging the insurer fraudulently shifted Hurricane Katrina wind damage claims to the National Flood Insurance Program. Their attorney disclosed the sealed complaint to the media. State Farm moved to dismiss, arguing the seal violation mandated automatic dismissal. The District Court refused to dismiss, but the Fifth Circuit reversed. The Supreme Court granted certiorari. On December 6, 2016, in a unanimous opinion by Justice Kennedy, the Court held that the False Claims Act’s seal requirement is not jurisdictional and its violation does not compel dismissal; instead, district courts have discretion to impose appropriate sanctions.

The Supreme Court unanimously held that violating the seal requirement does not compel dismissal and affirmed the District Court’s discretion to impose alternative sanctions.

Whether a violation of the False Claims Act’s seal requirement mandates automatic dismissal of a qui tam complaint.

The ruling reinforced the False Claims Act as a robust anti-fraud mechanism, safeguarding whistleblowers from dismissal on procedural technicalities. It clarified that district courts have flexibility to sanction without terminating valid suits, promoting fairness while preserving the seal’s integrity. The decision was widely seen as a victory for qui tam relators and the government’s ability to recover funds lost to fraud.