UNITED STATES OF AMERICA v. CAROLINA COMPREHENSIVE HEALTH NETWORK, PA et al

Filing 57

MEMORANDUM OPINION AND ORDER granting the Motion to Seal (Docket Entry 52 ) signed by MAG/JUDGE L. PATRICK AULD on 2/1/2021. (Daniel, J)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

UNITED STATES OF AMERICA,
ex rel. CYNTHIA SMITH and
MELANIE CHILDRESS
Plaintiffs,
v.
CAROLINA COMPREHENSIVE
HEALTH NETWORK, PA, et al.
Defendants.

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1:16cv234

MEMORANDUM OPINION AND ORDER
This matter comes before the Court on a request to seal by the
United States (Docket Entry 52) (the “Motion to Seal”).

For the

reasons that follow, the Court will grant the Motion to Seal.
INTRODUCTION
Asserting violations of the False Claims Act (“FCA”), Cynthia
Smith and Melanie Childress (the “Relators”) commenced this qui tam
action on behalf of the United States.
“Complaint”) at 3.)

(Docket Entry 1 (the

The Complaint remained under seal “for at

least 60 days” to allow the United States an opportunity to review
“the material evidence and information” before deciding whether to
intervene.

31 U.S.C. § 3730(b)(2).

On numerous occasions, the

United States “move[d] . . . for extensions of the time during
which the complaint remain[ed] under seal,” id. § 3730(b)(3), which
the FCA authorizes upon a showing of “good cause,” id.

(See Docket

Entries 5, 9, 12, 15, 18, 24, 27, 33, 37, 40, 46, 49) (“Ex Parte
Application[s] for Extension of Time to Decline or Intervene and

for Extension of Seal” filed between June 28, 2016, and May 26,
2020).

A sealed memorandum accompanied each application.

(See

Docket Entries 6, 10, 13, 16, 19, 25, 28, 34, 38, 41, 47, 50) (the
“Extension Memoranda”).
extension request.

On each occasion, the Court granted the

(See Docket Entries 8, 11, 14, 17, 20, 26, 29,

35, 39, 42, 48, 51.)
On July 27, 2020, the United States filed the Motion to Seal,
declining to intervene in this action and seeking a permanent seal
as to several Extension Memoranda.

(Docket Entry 52 at 3 (listing

Docket Entries 13, 16, 19, 25, 28, 34, 38, 47, 50).)
States

alternatively

requested

permission

to

file

The United
“redacted

versions of [the Extension Memoranda] for the public docket, to
protect the most sensitive information.”

(Id. at 6.)

Upon review of the Motion to Seal, the Court directed the
Clerk to unseal this action except for the specified Extension
Memoranda.

(Text Order dated Aug. 13, 2020.)

The Court further

ordered “the United States to file . . . a memorandum (with a
sealed supplement, if necessary) showing why [the documents] should
remain

sealed

in

their

entirety.”

(Id.)

As

concerns

the

alternative request for relief, the Court required that “the
memorandum (and/or sealed supplement) . . . attach any proposed
redacted versions of the documents at issue and . . . address the
specific basis for each proposed redaction.”

(Id.)

The United States filed a memorandum as directed, clarifying
that

the

Memoranda.

Motion

to

Seal

inadvertently

omits

one

Extension

(Docket Entry 55 at 1 (adding Docket Entry 41, for a
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total of ten documents).)

The United States also filed a sealed

supplement explaining the justifications for sealing, at a minimum,
specific portions of each Extension Memoranda. (Docket Entry 56 at
2–5.)

An exhibit to the sealed supplement provides proposed

redacted versions of each document.

(Docket Entry 56-1.)

DISCUSSION
I. Relevant Standards
“When presented with a request to seal judicial records,” the
Court begins by “determin[ing] the source of the right of access
with respect to each document,” as “only then can it accurately
weigh the competing interests at stake.” Virginia Dep’t of State
Police v. Washington Post, 386 F.3d 567, 576 (4th Cir. 2004)
(internal quotation marks omitted).

“[Whereas] the common law

presumption in favor of access attaches to all ‘judicial records
and documents,’ the First Amendment guarantee of access has been
extended only to particular judicial records and documents.” Stone
v. University of Md. Med. Sys. Corp., 855 F.2d 178, 180 (4th Cir.
1988) (internal citation omitted).
“[The common law] presumption of access . . . can be rebutted
if countervailing interests heavily outweigh the public interests
in access.”

Rushford v. New Yorker Magazine, Inc., 846 F.2d 249,

253 (4th Cir.

1988).

To

decide

whether

such

countervailing

interests overcome the common law presumption, courts consider
“whether the records are sought for improper purposes, such as
promoting public scandals or unfairly gaining a business advantage;
whether release would enhance the public’s understanding of an
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important historical event; and whether the public has already had
access to the information contained in the records.”
Publ’g Co., 743 F.2d 231, 235 (4th Cir. 1984).

In re Knight

Under the more

stringent First Amendment standard, the Court may seal material
“only on the basis of a compelling governmental interest, and only
if the denial [of access] is narrowly tailored to serve that
interest.”

Stone, 855 F.2d at 180.

Under either standard, the Court evaluates the competing
interests according to the following procedure.

First, “it must

give the public notice of the request to seal and a reasonable
opportunity to challenge the request.”
Police, 386 F.3d at 576.
alternatives to sealing.”

Virginia Dep’t of State

Next, “it must consider less drastic
Id.

Finally, “if it decides to seal[,]

it must state the reasons (and specific supporting findings) for
its

decision

sealing.”

and

Id.

the

reasons

for

rejecting

alternatives

to

Those steps “ensure that the decision to seal

materials will not be made lightly and that it will be subject to
meaningful appellate review.” Id. This approach also reflects the
reality that “[t]he operations of the courts and the judicial
conduct of judges are matters of utmost public concern,” Landmark
Commc’ns, Inc. v. Virginia, 435 U.S. 829, 839 (1978), as well as
that “the public’s business is best done in public,” Cochran v.
Volvo Grp. N. Am., LLC, 931 F. Supp. 2d 725, 727 (M.D.N.C. 2013).
The legal framework described above applies to requests by a
party to file a redacted document, i.e., a document sealed in part.
See United States v. Moussaoui, 65 F. App’x 881, 889 (4th Cir.
-4-

2003) (“As to those documents subject to a right of access, we must
then conduct the appropriate balancing to determine whether the
remainder of the document should remain sealed, in whole or in
part.”); see also Wolfe v. Green, Civ. Action No. 2:08–01023, 2010
WL 5175165, at *2–3 (S.D.W. Va. Dec. 15, 2010) (granting parties’
joint motion to redact filings and holding that parties made
necessary showing to address both common law and First Amendment
rights of access); Bethesda Softworks, LLC v. Interplay Entm’t
Corp., Civ. Action No. 09–2357, 2010 WL 3781660, at *9–10 (D. Md.
Sept. 23, 2010) (treating motion to redact transcript as motion to
seal).

“The interest of the public in the flow of information is

protected by [the Court’s] exercis[e of] independent judgment
concerning redactions.”

Moussaoui, 65 F. App’x at 888 (citing

United States v. Pelton, 696 F. Supp. 156, 159 n. 2 (D. Md. 1986)
(noting that court would “carefully compare the redacted version
[of a transcript] to the unredacted version for accuracy and to
determine whether all the proposed deletions are necessary”)).
II. Analysis
A. Preliminary Matters
In the Motion to Seal, the United States has argued that the
common law right of access applies to the Extension Memoranda and
that the countervailing interest in “protect[ing] the details of
the United States’ investigatory process from disclosure” (Docket
Entry 52 at 3) warrants a permanent seal.

(See id. at 3–5.)

According to the United States, the First Amendment right of access
does not attach to such documents.
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(See id. at 4 n.3 (citing

United States v. Appelbaum (In re United States), 707 F.3d 283,
291–92 (4th Cir. 2013) (finding no First Amendment right of access
to motions and orders under Stored Communications Act).)
“Although the FCA explicitly contemplates that the complaint
will be unsealed once the government has decided whether or not to
intervene, it does not address whether the government’s motions for
extensions of time and accompanying memoranda should remain under
seal indefinitely.”

United States ex rel. Rostholder v. Omnicare,

Inc., 799 F. Supp. 2d 547, 548 (D. Md. 2011).

Nor has the United

States Court of Appeals for the Fourth Circuit “addressed whether
anything beyond the qui tam complaint must be unsealed.”

Id.

However, the Fourth Circuit has noted that “the ‘good cause’
standard in section 3730(b)(3),” the showing required to extend the
time during which the FCA complaint remains under seal, mirrors the
“standard contained in Rule 26 of the Federal Rules of Civil
Procedure, which permits a federal court to require that certain
matters be sealed,” ACLU v. Holder, 673 F.3d 245, 254 (4th Cir.
2011).

Additionally, many “[c]ourts have analogized disputes over

whether to unseal documents under the FCA to discovery disputes
under

[Rule]

26(c),

which

authorizes

protective

orders

for

confidential trade secrets and similar information.” United States
ex rel. Rostholder, 799 F. Supp. 2d at 548 (collecting cases); but
see United States ex rel. Littlewood v. King Pharms., Inc., 806 F.
Supp. 2d 833, 836, 841–44 (D. Md. 2011) (discussing both common law
right of access and Rule 26(c) standard).

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No

court

appears

to

have

held

that

the

First

Amendment

protects public access to documents like the Extension Memoranda.
Cf. ACLU, 673 F.3d at 252 (“assum[ing] without deciding that the
First Amendment right of access extends to a qui tam complaint and
docket sheet”) (emphasis added); Under Seal v. Under Seal, 326 F.3d
479,

480,

486

(4th

Cir.

2003)

applicable to FCA complaint).1

(deeming

common

law

standard

“The test for determining whether

a first amendment right of access is available is: 1) ‘whether the
place and process have historically been open to the press and
general public,’ and 2) ‘whether public access plays a significant
positive role in the functioning of the particular process in
question.’”

Baltimore Sun Co. v. Goetz, 886 F.2d 60, 64 (4th Cir.

1989 (quoting Press-Enterprise Co. v. Superior Ct., 478 U.S. 1,
8–10 (1986)).
right

of

For example, the public enjoys no First Amendment

access

to

motions

and

orders

under

the

Stored

Communications Act (“SCA”), which authorizes the government to
obtain

stored

electronic

criminal investigations.

communications

relevant

to

ongoing

In re United States, 707 F.3d at 287,

290–92. There exists “no long tradition of access” to orders under
the SCA, a statute enacted in 1986.

Id. at 291.

Moreover, the

“process [under the SCA] is investigative, and openness of the

1

In concluding that the record should remain unsealed, the
Fourth Circuit observed that “the purpose of the FCA does not
support continued sealing, and only justifies sealing in order that
the government may investigate.”
Under Seal, 326 F.3d at 486
(emphasis in original).
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orders does not play a significant role in the functioning of
investigations.”
Whether

Id. at 292.

the

common

law

right

of

access

applies

to

the

Extension Memoranda depends on whether the documents constitute
judicial records.

“[T]he mere filing of a document with a court

does not render the document judicial.”

Spear v. Ernst & Young,

(In re Policy Mgt. Sys. Corp.), Nos. 94-2254, 94-2341, 67 F.3d 296
(table),

1995

WL

541623,

at

*4

(4th

Cir.

Sept.

13,

1995)

(unpublished).

Rather, to qualify as a judicial record, the filed

document

“play

must

a

role

in

adjudicate substantive rights.”

the

adjudicative

process,

or

In re United States, 707 F.3d at

290 (holding that motions and orders under the SCA constitute
judicial records).

If no public access right applies to the

materials at issue here, the Court “balance[s, under Rule 26(c),]
the need for transparency in the judiciary with the effective
protection of sensitive information,”
(internal quotation omitted).

ACLU, 673 F.3d at 257

This Court previously has applied

both the common law and Rule 26(c) standards in the absence of
Fourth Circuit authority identifying the proper inquiry.

See

Kinetic Concepts, Inc. v. Convatec Inc., No. 1:08CV00918, 2010 WL
1418312, at *8–10 (M.D.N.C. Apr. 2, 2010).
Here,

consistent

with

its

previous

approach,

the

Court

considers, in light of the common law and Rule 26(c) standards,
whether the United States has justified maintaining the Extension

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Memoranda under permanent seal.2

The Extension Memoranda may

constitute judicial records “because they were filed with the
objective of obtaining judicial action or relief,” In re United
States, 707 F.3d at 291, but they concern procedural, rather than
substantive, matters: whether the qui tam action could remain under
seal for an extended period to allow the United States additional
time to decide whether to intervene.

Under the circumstances,

application of either standard yields the same result, for the
reasons discussed below.
B. The Motion to Seal
According to the Motion to Seal, the Extension Memoranda
necessarily reveal “sensitive nonpublic facts,” including “the
nature and scope of an investigation,” to demonstrate “good cause”
for the previous extension requests.

(Docket Entry 52 at 5

(quoting In re § 2703(d) Order, 787 F. Supp. 2d 430, 442-43 (E.D.
Va.

2011).)

The

United

States

contends

that

the

Extension

Memoranda further disclose “the Government’s strategy and thought
process regarding the investigation.”

(Id. (quoting Aldrige ex

rel. United States v. Cain, No. 1:16-CV-369, 2018 WL 1162252, at *8
(S.D. Miss. Mar. 4, 2018)); see also Docket Entry 55 at 2 (“[E]ach
[Extension

Memoranda]

contains

confidential

investigative

information and/or reveals the Government’s internal, nonpublic
thought processes related to its investigation.”).)

2

Finally, the

The Court finds no First Amendment right of access to the
Extension Memoranda because they relate to an investigative process
in which openness plays no significant role.
See In re United
States, 707 F.3d at 292.
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United States asserts that unsealing the documents “would dissuade
the government from fully explaining its needs for extensions in
the future.”

(Docket Entry 55 at 2.)

All parties and the public have possessed access to the Motion
to Seal since November 25, 2020.
2020.)3

(See Text Order dated Aug. 13,

Accordingly, the Court finds all procedural prerequisites

satisfied, as any interested persons have received “notice of the
request to seal and a reasonable opportunity to challenge the
request,” Virginia Dep’t of State Police, 386 F.3d at 576.
Because “[the Court] must consider less drastic alternatives
to sealing,” id., and because the United States has represented
that the proposed redactions adequately “protect the most sensitive
information” (Docket Entry 52 at 6), the Court declines to seal the
Extension Memoranda in their entirety.
carefully

compare

the

redacted

Instead, “the [C]ourt will

version[s]

to

the

unredacted

version[s] . . . to determine whether all the proposed deletions
are necessary.”

Pelton, 696 F. Supp. at 159 n. 2.

The United States seeks to seal (i) information concerning
“good cause” for the extension request and (ii) other limited
portions of each Extension Memoranda. (See Docket Entry 56-1.) In
each case, the redacted material amounts to one or two paragraphs.
(See id.) The proposed redactions fall into one of two categories:

3

The unsealing the Court previously ordered (with, among
other things, the intent of affording public notice prior to a
decision on sealing) did not immediately occur due to technical
issues, but, since correction of those issues, no interested
non-parties filed anything.
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nonpublic investigative details or internal governmental “thought
processes” (Docket Entry 55 at 2).
Nonpublic Investigative Details
The

interest

in

protecting

government

investigations,

particularly in their early stages, may outweigh the common law
right of access.

By way of example, courts may docket search

warrant

under

materials

seal.

See

Goetz,

886

F.2d

at

65.

Similarly, “the proper functioning of our grand jury system depends
upon the secrecy of grand jury proceedings.”

Douglas Oil Co. v.

Petrol Stops Northwest, 441 U.S. 211, 218 (1979).
such

materials

demonstrates

that,

to

The sealing of

safeguard

government

investigations, courts may shield certain information from public
view, even when the presumption of public access would otherwise
warrant disclosure.
Under the circumstances here, the interest in protecting
nonpublic investigative details overrides the common law right of
access to the Extension Memoranda.
between

“transparency

in

the

Put another way, the balance

judiciary

[and]

the

effective

protection of sensitive information,” ACLU, 673 F.3d at 257, weighs
in favor of redaction.
Internal Governmental “Thought Processes”
“In FCA cases, it is appropriate to deny a motion to unseal a
court file if unsealing would disclose confidential investigative
techniques[.]”

United

States

ex

rel.

Yannacopolous

v.

Dynamics, 457 F. Supp. 2d 854, 858 (N.D. Ill. 2006).

Gen.
Such

techniques may include “information about . . . what items might be
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looked for in an audit, what types of employees of an entity should
be contacted and how, what laboratory tests might be utilized, or
the like.”

United States ex rel. Mikes v. Straus, 846 F. Supp. 21,

23 (S.D.N.Y. 1994).

In contrast, courts need not seal documents

concerning “routine investigative procedures which anyone with
rudimentary knowledge of investigative processes would assume would
be utilized in the regular course of business.”

Id.; see also

United States ex rel. O’Keefe v. McDonnell Douglas Corp., 902 F.
Supp. 189, 191–92 (D. Mo. 1995) (denying motion to unseal documents
that

“provide[d]

some

substantive

details

regarding

the

government’s methods of investigation”).
Here, although it presents a closer question than as to
nonpublic investigative details, the material concerning internal
governmental “thought processes” merits redaction.

The Extension

Memoranda go beyond “describ[ing] routine investigative procedures
with

as

little

detail

as

possible,”

United

States

ex

rel.

Rostholder, 799 F. Supp. at 549, but they stop short of disclosing
highly specific techniques or procedures, United States ex rel.
Mikes, 846 F. Supp. at 23.

Certain redacted portions of the

Extension Memoranda reference publicly available information, but
they likewise disclose non-public procedures and strategies that
reveal, to

some

investigations.

extent,

how

the

United

States

handles

fraud

Given the importance of protecting the integrity

of such investigations, the proposed redactions pass muster under
the common law or Rule 26(c) standards.

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CONCLUSION
The interest of protecting non-public investigative details
and internal governmental “thought processes” outweighs the common
law right of access to the Extension Memoranda.

To the extent no

right of access applies to such documents, such details warrant
protection from public disclosure, in accordance with Rule 26(c).
IT IS THEREFORE ORDERED that the Motion to Seal (Docket Entry
52) is GRANTED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
February 1, 2021

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