On May 6, 2019, the U.S. Court of Appeals for the First Circuit overturned its own precedent, holding that the first-to-file rule is not jurisdictional. United States v. Millennium Labs., Inc., No. 17-1106, 2019 WL 1987249, at *1 (1st Cir. May 6, 2019). The First Circuit now joins the D.C. Circuit and the Second Circuit in treating the first-to-file requirement as merely a matter of adequate pleading (see United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 86 (2d Cir.) (per curiam), cert. denied, 138 S. Ct. 199 (2017); United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 120-21 (D.C. Cir. 2015)), widening an existing circuit split on the issue. See, e.g., United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014) (first-to-file rule is jurisdictional).
Sidley lawyers Kristin Graham Koehler and Josh Fougere have authored an article as a part of the Washington Legal Foundation’s Counsel’s Advisories series, entitled “Appeals Court Holds That First-To-File Violations Require Dismissal Of False Claims Act Suits.” The article examines the Second Circuit’s recent ruling in United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163 (2d Cir. 2018). The Second Circuit joined a growing majority view in holding that a violation of the False Claims Act’s “first-to-file bar cannot be remedied by amending or supplementing the complaint” but, instead, requires dismissal. In reaching that conclusion, the court of appeals made two important points. First, the Second Circuit rejected the relator’s contention that the earlier-filed suits did not trigger the first-to-file bar because they were deficiently pled and were not as detailed as the current complaint. Second, the Second Circuit held that, if a “related action” is “pending” when the relator initially files the complaint, the relator cannot “cure” the violation through amendment after the earlier action is dismissed. The only remedy is dismissal. This emerging consensus has important consequences for statutes of limitations and for how parallel courts handle multiple qui tam suits making similar allegations.
The article is available for download on the Washington Legal Foundation’s website: https://www.wlf.org/2018/10/18/publishing/appeals-court-holds-that-first-to-file-violations-require-dismissal-of-false-claims-act-suits/.
The Solicitor General recently filed a brief in the United States Supreme Court stating that “the required remedy for a first-to-file violation is dismissal.” U.S. Br. 10 (emphasis added).
The brief was filed in the context of the long-running case that produced the Court’s opinion a few years ago in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015). On remand, the petitioner, Benjamin Carter, maintained that the intervening dismissals of two earlier-filed cases “cured” any first-to-file defect with his case, such that dismissal and re-filing of Carter’s complaint was unnecessary. The district court and the Fourth Circuit disagreed. Carter then sought certiorari, and the Supreme Court invited the Solicitor General to weigh in. (The government recommended against certiorari, and the Court denied the petition on June 25, 2018.) (more…)
Last month, in United States ex rel. Little et al. v. Triumph Gear Systems, Inc., the Tenth Circuit answered in important question about the interplay between Federal Rule of Civil Procedure 15 regarding leave to amend parties, and the FCA’s first-to-file bar. The specific question before the court was whether the FCA’s first-to-file rule precludes a non-party from intervening in a pending qui tam action by seeking leave to amend under Rule 15. The Tenth Circuit held that it does. (more…)
The Third Circuit may become the second court of appeals to weigh in on whether a relator in a qui tam action may amend her complaint under Rule 15 to add claims previously prohibited by the “first-to-file” rule. Last week, a federal court certified this and two additional questions for interlocutory review. The district court’s decision follows an April ruling denying Pfizer’s motion to dismiss an amended complaint in a case that is over a decade old, and the question has important implications for the viability of otherwise time-barred claims. (more…)
Although a district judge declined an invitation to reconsider his recent opinion in United States ex rel. Little and Motaghed v. Triumph Group, Inc., et al., the court stayed its judgment and certified to the Tenth Circuit an important FCA first-to-file issue.
This past January, we wrote about the First Circuit decision’s in United States ex rel. Gadbois v. PharMerica Corp., No. 14-2164 (1st Cir. Dec. 16, 2015), which addressed the applicability of the first-to-file bar once the first-filed case is dismissed (see here). The first-to-file bar provides that “[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). Although the relator, Gadbois, filed his complaint during the pendency of a related action, the unanimous panel held that settlement of the related action subsequent to the district court’s ruling cured the jurisdictional defect in Gadbois’s complaint. Accordingly, the First Circuit remanded the case and permitted Gadbois to file a motion for leave to supplement his complaint.
A unanimous panel of the United States Court of Appeals for the First Circuit recently vacated and remanded a district court ruling that a relator’s suit against PharMerica Corp. was barred by the first-to-file rule. See United States ex rel. Gadbois v. PharMerica Corp., No. 14-2164 (1st Cir. Dec. 16, 2015). The appellate court’s decision to permit leave to supplement the complaint addresses a key question left unanswered by the Supreme Court’s decision in Carter – whether the dismissal of a first-filed complaint cures the jurisdictional defect resulting when a second complaint is filed while the first complaint is pending.
As we reported previously, earlier this year the Supreme Court held in Kellogg Brown & Root Services, Inc. et al. v. U.S. ex rel. Carter that the FCA’s first-to-file bar ceases to apply once a first-filed suit is dismissed. Notwithstanding that ruling, which ostensibly favored the relator, the district court on remand recently dismissed the case, again on first-to-file grounds. On remand, Carter argued that because the first-filed case that had preceded the filing of his case had since been dismissed, the Supreme Court’s decision suggested that the first-to-file bar no longer applied and therefore his case should not have been dismissed. The district court, however, disagreed with Carter’s interpretation of the Supreme Court opinion that “an existing case may proceed to trial automatically when a first-filed suit is dismissed.” Pointing to the U.S. District Court for the District of Columbia’s opinion in United States ex rel. Shea v. Verizon Communications, Inc., which stated that “Plaintiffs, other than the Government, may not file FCA actions while a related action is pending,” the district court held that because there was a first-filed case pending at the time that Carter filed his case, the first-to-file bar applied. In other words, the filing of Carter’s case was per se improper because a case was already pending when Carter filed his suit. The fact that the first-filed case was later dismissed would not, the district court concluded, operate to save from dismissal a case that was barred by the first-to-file bar at the time it was filed.
On October 6, 2015, the U.S. District Court for the District of Columbia allowed relator Stephen Shea to refile his case against Verizon in order to avoid the False Claims Act’s first-to-file bar. See U.S. ex rel. Shea v. Verizon Business Network Services et al., No. 09-1050-GK (D.D.C. Oct. 6, 2015). By allowing Shea to refile, the District Court took an important stance on the FCA’s public disclosure bar that may make it more difficult for future defendants to advance the bar.