out of refills). In assessing whether the relators’ action was “related” to the earlier-filed lawsuit, the court commented that “[r]elatedness is not a difficult threshold to meet,” and “focuses on” the “essential facts” and “whether the later complaint alleges a fraudulent scheme the government already would be equipped to investigate based on the first complaint.” Even though the relators provided “finer details” of the purported fraud ( e.g. , the pharmacy dispensing illegal refills through different processes and staff sometimes intentionally entering wrong information into the system), the court found that the first- to-file bar applied because “both complaints allege the same fraudulent scheme” whereby the pharmacy manipulated “its internal systems in such a way so as to allow the consistent and unchecked dispensation of drugs without valid prescriptions.” Following Second Circuit precedent, the district court noted that the relators could not save their qui tam action from the first-to-file bar by amending or supplementing their complaint. By comparison, in U.S. ex rel. Fitzer v. Allergan, Inc. , the district court found the first-to- file bar inapplicable and reasoned that “[t]he bar exists to prevent multiple qui tam suits focused on the same conduct, not to preclude two suits that focus on entirely different conduct, but which both happen to involve the use of the same website.” 156 There, the relator alleged that the manufacturer of the LAP-BAND used a physician locator on its website to conduct a kickback scheme by providing surgeons with free advertising on the website to induce them to recommend the device and by implementing a quota of LAP-BAND surgeries that a physician needed to perform each year for inclusion on the physician locator. The defendants asserted that a prior suit filed against them was a “related” action, triggering the first-to-file bar, because it also alleged a kickback scheme involving LAP-BAND’s promotional practices. The district court disagreed, explaining that a “close comparison” of the two actions revealed that they “focused” on different fraudulent schemes: whereas this case “focused exclusively” on the website and its use to increase sales through the physician locator, the earlier action “focused on” an elaborate scheme to cover up a design defect in the device. The district court noted that the mere fact that the prior complaint referenced use of the website to drive sales was insufficient to apply the bar. Mohajer and Fitzer also reflected the ongoing circuit split regarding the jurisdictional nature of the first-to-file bar, with the latter noting it is jurisdictional based on Fourth Circuit precedent and the former noting the opposite based on Second Circuit precedent. GOVERNMENT ACTION BAR The government action bar originates from the FCA’s statutory text, which states that “[i]n no event may a person bring [a qui tam action] which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil monetary penalty proceeding in which the Government is already a party.” 157 In U.S. ex rel. Vermont Nat’l Tel. Co. v. Northstar Wireless LLC , the district court granted the defendants’ motion to dismiss for lack of jurisdiction based on the government action bar. 158 The relator alleged that a large telecommunications company manipulated the Federal Communications Commission’s (FCC) auction rules to obtain fraudulent small
The FCA’s first-to-file bar prohibits any person other than the government from “bring[ing] a related action based on the facts underlying” an already “pending” FCA action. Recent cases have examined the bar’s application to related cases, whether amending a complaint can save it from the bar, and whether the bar is jurisdictional in nature.
about the scheme to the FBI, but before filing his qui tam case, Fesenmaier filed for Chapter 7 bankruptcy, during which he did not list the potential FCA case among his assets and liabilities. As a result, Precision Lens filed its own FCA case alleging that because Fesenmaier failed to disclose the potential FCA litigation in his bankruptcy petition, his FCA claims were “legally false” and his retention of a portion of the recovery was fraudulent. Precision Lens conceded that its allegations had been previously disclosed through Fesenmaier’s FCA litigation, but claimed it was an original source because it voluntarily disclosed information underlying its case during Fesenmaier’s deposition in the prior FCA litigation. The district court held that Precision Lens could not qualify as an original source because it had not “voluntarily disclosed” the information. Rather, the district court found that Precision Lens’s disclosure was “clearly motivated by Precision Lens’s self-interested desire to defend itself in the Fesenmaier litigation and shift focus of that fraud investigation from Precision Lens to Fesenmaier.” FIRST-TO-FILE BAR The FCA’s first-to-file bar prohibits any person other than the government from “bring[ing] a related action based on the facts underlying” an already “pending” FCA action. 154 Recent cases have examined the bar’s application to related cases, whether amending a complaint can save it from the bar, and whether the bar is jurisdictional in nature. In U.S. ex rel. Mohajer v. Omnicare, Inc. , the district court granted the defendants’ motion to dismiss based on application of the first-to-file bar. 155 Both the underlying qui tam action and an earlier-filed action alleged that a long-term care pharmacy dispensed drugs to individuals at long-term care facilities based on invalid prescriptions ( e.g. , expired or run
156 2021 WL 4133713 (D. Md. Sept. 10, 2021). 157 31 U.S.C. § 3730(e)(3). 158 531 F. Supp. 3d 247 (D.D.C. 2021).
154 31 U.S.C. § 3730(b)(5). 155 525 F. Supp. 3d 447 (S.D.N.Y. 2021).
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