The U.S. Court of Appeals for the Third Circuit has reopened a False Claims Act case against a company providing tutors to public school districts after the suit was dismissed under the entire controversy doctrine.

The appeals court said allowing the underlying decision to stand would encourage potential False Claims Act defendants to “smoke out” whistleblower suits by suing potential relators and then settling those claims with the purpose of barring a qui tam action. A district court judge dismissed the underlying lawsuit against American Tutor of Hillsborough because, in the seven years when that case was pending under seal, a settlement was reached in the company’s state-court defamation suit against the whistleblower.

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