Fifth Circuit Applies First-To-File Bar in Fraudulent Billing Suit

Posted by Scott Stein and Catherine Starks

On June 4, 2014, the Fifth Circuit affirmed the dismissal of a qui tam suit under the first to file bar, even though the later-filed complaint referred to specific government programs and the first-filed complaint did not. United States ex rel. Johnson v. Planned Parenthood of Houston and Southeast Texas, Inc., Case No. 13-20206 (5th Cir. June 4, 2014). A copy of the decision can be found here.

Relator Johnson, a former Planned Parenthood employee, alleged that Planned Parenthood falsely billed the Texas Women’s Health Program (“TWHP”), a Medicaid waiver program, for non-reimbursable procedures and services and unperformed laboratory tests, among other activities. The district court dismissed Johnson’s suit under the FCA and Texas Medicaid Fraud Prevention Act based on a case filed before the Johnson complaint by a different relator (Karen Reynolds) who, without explicitly identifying TWHP as a payor, alleged that Planned Parenthood fraudulently billed Medicaid programs for unnecessary medical services or services not rendered, among other activities.

On appeal, Johnson challenged the first to file dismissal on grounds that the Reynolds complaint did not mention TWHP or other specific Medicaid programs. However, the Fifth Circuit concluded that because both complaints alleged that Planned Parenthood’s billing practices caused the fraudulent receipt of funding from the federal government and the Texas Medicaid programs, an investigation into the allegations would have likely uncovered the same fraudulent activity, particularly because TWHP is a Texas Medicaid program. The court reasoned: “Considering that this court has previously held that fraudulent filings occurring in different states would be discovered through a thorough investigation into the filing system of an insurance company, it is likely that an investigation into fraudulent Medicaid filings would uncover fraudulent filings for related programs, as the alleged fraudulent activity occurred within the same offices.” Additionally, although Johnson argued that her allegations of fraud were different in kind because Reynolds alleged fraudulent billing for services not performed whereas Johnson alleged that the services were improperly coded, the Fifth Circuit held that the specific facts added by Johnson were not sufficient to avoid the first-to-file bar because both complaints alleged that fraud was committed by altering patient records and billing Medicaid programs for services other than those rendered.

The case suggests that, in fraudulent billing cases, the first to file bar may apply broadly where there is a previously-filed case alleging the fraudulent receipt of funds from related government programs, and even where alleged billing practices differ from practices that were the subject of an earlier-filed case.