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January 16, 2018

16 January 2018

Ninth Circuit Validates Value of Government-Action Bar Against Parasitic Qui Tam Suits

In a matter of first impression, the Ninth Circuit recently interpreted the “government-action bar,” one of the defenses to a parasitic False Claims Act (“FCA”) action, to offer meaningful protection to defendants who resolve one action from having to defend a whistleblower’s effort to capitalize on claims not previously litigated. See United States ex rel. Bennett v. Biotronik, Inc., 876 F.3d 1011 (9th Cir. 2017).  The government-action bar prohibits a relator from bringing a qui tam suit “based upon allegations or transactions which are the subject of a civil suit . . . in which the Government is already a party.”  31 U.S.C. § 3730(e)(3).  Until recently, the temporal and substantive reach of the government-action bar was unclear because of two unanswered questions:  First, no court had made clear whether the government-action bar applied to suits that had been dismissed or otherwise resolved. Second, it was unclear whether there was a bar to a whistleblower action where the government intervened to settle some, but not all, of the “allegations and transactions” asserted in a complaint, and the subsequent suit asserted claims based on the uncovered conduct that was dismissed without prejudice as part of the earlier settlement.  In a two-to-one decision, the Ninth Circuit provided settling defendants with some better assurances that when they settle an intervened qui tam suit with the government, they will not later be subject to a parasitic money grab by a different relator based upon the same allegations and transactions.   (more…)

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