Flood vis Wind in Supreme Court

SUPREME COURT OF THE UNITED STATES Syllabus STATE FARM FIRE & CASUALTY CO. v. UNITED STATES EX REL. RIGSBY ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 15–513. Argued November 1, 2016—Decided December 6, 2016 The False Claims Act (FCA) authorizes private parties (known as relators) to seek recovery from persons who make false or fraudulent payment claims to the Federal Government, 31 U. S. C. §§3729–3730, and permits the Attorney General to intervene in a relator’s action or bring an FCA suit in the first instance, §§3730(a)–(b). This system is designed to benefit both the relator and the Government. A relator who initiates a meritorious qui tam suit receives, inter alia, a percentage of the ultimate damages award, §3730(d), while “ ‘encourag[ing] more private enforcement suits’” serves “‘to strengthen the Government’s hand in fighting false claims,’ ” Graham County Soil and Water Conservation Dist. v. United States ex rel. Wilson, 559 U. S. 280, 298. The FCA establishes specific procedures for relators to follow, including the requirement relevant here: “The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.” §3730(b)(2). In the years before Hurricane Katrina, petitioner State Farm issued, as pertinent here, both Federal Government-backed flood insurance policies and petitioner’s own general homeowner policies. Respondents Cori and Kerri Rigsby, former claims adjusters for one of petitioner’s contractors, E. A. Renfroe & Co., filed a complaint under seal in April 2006, claiming that petitioner instructed them and other adjusters to misclassify wind damage as flood damage in order to shift petitioner’s insurance liability to the Government. The District Court extended the length of the seal several times at the Government’s request, but lifted the seal in part in January 2007, allowing disclosure of the action to another District Court hearing a suit by 2 STATE FARM FIRE & CASUALTY CO. v. UNITED STATES EX REL. RIGSBY Syllabus E. A. Renfroe against respondents. In August 2007, the District Court lifted the seal in full. The Government subsequently declined to intervene. Petitioner moved to dismiss the suit on the grounds that respondents had violated the seal requirement. Specifically, it alleged, respondents’ former attorney had disclosed the complaint’s existence to several news outlets, which issued stories about the fraud allegations, but did not mention the existence of the FCA complaint; and respondents had met with a Congressman who later spoke out against the purported fraud. The District Court applied the test for dismissal set out in United States ex rel. Lujan v. Hughes Aircraft Co., 67 F. 3d 242, 245–247. Balancing three factors—actual harm to the Government, severity of the violations, and evidence of bad faith—the court decided against dismissal. Petitioner did not request a lesser sanction. The Fifth Circuit affirmed. It first concluded that a seal violation does not require mandatory dismissal of a relator’s complaint. It then considered the same factors weighed by the District Court and reached a similar conclusion. Held: 1. A seal violation does not mandate dismissal of a relator’s complaint. Pp. 6–9. (a) The FCA does not enact so harsh a rule. Section 3730(b)(2)’s requirement that a complaint “shall” be kept under seal is a mandatory rule for relators. But the statute says nothing about the remedy for violating that rule; and absent congressional guidance regarding a remedy, “the sanction for breach [of a mandatory duty] is not loss of all later powers to act.” United States v. Montalvo-Murillo, 495 U. S. 711, 718. The FCA’s structure supports this result. The FCA has a number of provisions requiring, in express terms, the dismissal of a relator’s action. E.g., §§3730(b)(5), (e)(1)–(2). It is thus proper to infer that Congress did not intend to require dismissal for a violation of the seal requirement. See Marx v. General Revenue Corp., 568 U. S. ___, ___. This result is also consistent with the general purpose of §3730(b)(2), which was enacted as part of a set of reforms meant to “encourage more private enforcement suits,” S. Rep. No. 99–345, pp. 23–24, and which was intended to protect the Government’s interests, allaying its concern that a relator filing a civil complaint would alert defendants to a pending federal criminal investigation. It would thus make little sense to adopt a rigid interpretation that prejudices the Government by depriving it of needed assistance from private parties. Pp. 6–7. (b) Petitioner’s arguments to the contrary are unavailing. There is no textual indication that Congress conditioned the authority to file a private right of action on compliance with the seal requirement Cite as: 580 U. S. ____ (2016) 3 Syllabus or that the relator’s ability to bring suit depends on adherence to the seal requirement. And the Senate Committee Report’s recitation of the FCA’s general purpose is best understood to support respondents rather than a mandatory dismissal rule. Moreover, because the FCA’s text and structure are clear, there is no need to accept petitioner’s invitation to consider a few stray sentences from the legislative history. Pp. 8–9. 2. The District Court did not abuse its discretion by denying petitioner’s motion to dismiss. The question whether dismissal is appropriate should be left to the sound discretion of the district court. While the Hughes Aircraft factors appear to be appropriate, it is unnecessary to explore these and other relevant considerations, which can be discussed in the course of later cases. Pp. 9–10. 3. On this record, where petitioner requested no sanction other than dismissal, the question whether a lesser sanction—such as monetary penalties—is warranted is not preserved. P. 10. 794 F. 3d 457, affirmed. KENNEDY, J., delivered the opinion for a unanimous Court.