ATTORNEY NEWSLETTER
False Claims Act “First to File” Rule
Ruling Brings Ninth Circuit In Line With Othe Circuits
How Whistleblower Cases Work
Private citizens assist the government in recouping funds paid out on fraudulent claims by bringing a civil lawsuit on behalf of the government under the False Claims Act, (“FCA”), 31 U.S.C. § 3729 et seq. The private individuals or businesses bringing the actions are known as “relators,” and the cases themselves referred to as “qui tam” cases. If the government recovers, the relators are eligible for rewards, often in large amounts as in the settlement discussed below. 31 U.S.C. § 3730(d). The FCA includes a so-called “First to File” Rule:
“When a person brings an action under this subsection, 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).
The “First to File” Rule benefits the first relator to bring a qui tam case on a certain claim or set of claims about fraudulent conduct by a defendant. Relators of fraudulent conduct are often current or former employees, accountants, controllers or managers, or competitors of the business engaging in the fraud. If you have credible information of fraud against the government in violation of the FCA in San Francisco or elsewhere in California, call us today at (415)441-8669 and we can help. Our toll-free number is 1-888-50EVANS (888-503-8267).
Recent Ninth Circuit Ruling[1]
In September 2024, the Ninth Circuit reversed in part a district court’s dismissal of an action under the FCA for lack of jurisdiction under the Act’s First-to-File Rule and held that the First-to-File Rule is not jurisdictional. In doing so, the en banc court overruled circuit precedent and brought the Ninth Circuit in line with several other circuits.
In Stein ex rel. United States v. Kaiser Foundation Health Plan, Inc., the relators alleged that Kaiser-related entities committed Medicare fraud. The district court dismissed the action as barred by the first-to-file rule, 31 U.S.C. § 3730(b)(5) (the “First-to-File Rule”), because it related to earlier-filed pending actions against the same defendants. On appeal, the three-judge panel affirmed, applying the Ninth Circuit’s precedent that the First-to-File Rule is jurisdictional. The en banc court convened to “tidy up the law.” In doing so, it overruled prior Ninth Circuit precedent and held that the First-to-File Rule is not jurisdictional.
Applying the Supreme Court’s recent holding in Santos-Zacaria v. Garland, 598 U.S. 411 (2023), that a statutory bar is jurisdictional only if Congress clearly states that it is, the en banc court held that the First-to-File Rule is not jurisdictional because § 3730(b)(5) does not use the term “jurisdiction” or “include any other textual clue that points to jurisdiction,” unlike other provisions in the FCA that use explicitly jurisdictional language.
The Ninth Circuit has joined the First, Second, Sixth, and D.C. Circuits in agreeing that the FCA’s First-to-File Rule is not jurisdictional. See United States ex rel. Bryant v. Cmty. Health Sys., Inc., 24 F.4th 1024, 1036 (6th Cir. 2022); United States v. Millenium Labs., Inc., 923 F.3d 240, 248–51 (1st Cir. 2019); United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85–86 (2d Cir. 2017) (per curiam); United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 119–21 (D.C. Cir. 2015). Three other circuits have held that the First-to-File Rule is jurisdictional.[2] However, the Ninth Circuit observed that these cases predate the Supreme Court’s decision in Santos-Zacaria .
Starting A Qui Tam Action
Any False Claims Act whistleblower case begins by a relator filing a complaint under seal in the federal court usually for the United States District Court for the district where defendant is located or does business. At the same time, the relator submits a disclosure to the DOJ outlining the material evidence the relator has of the alleged false claims. 31 U.S.C. § 3730(b). The seal period of the complaint lasts 60 days during which the DOJ investigates the claims. 31 U.S.C. § 3730(b)(2). (If necessary, the government can, and often does, extend the 60-day period during which the allegations are kept under seal.) If the government decides to intervene in the case, the government essentially takes over the litigation. 31 U.S.C. § 3730(c)(1). If the government declines to intervene, the relator may proceed with the litigation on his or her own. 31 U.S.C. § 3730(c)(3).
Contact Us
If you have credible information of government fraud in San Francisco or elsewhere in California, call Ingrid M. Evans at (415) 441-8669, or toll-free at 1-888-50EVANS (888-503-8267) or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. In addition to FCA and CFCA whistleblower cases, Ingrid and Evans Law Firm, Inc. also handle bank fraud whistleblower cases under FIRREA/FIAFEA, commodity trading and securities fraud under the Commodities Futures Trading Commission Whistleblower Program and the Securities and Exchange Commission Whistleblower Program, and tax fraud under the Internal Revenue Service Whistleblower Program.
[1] Evans Law Firm, Inc. was not involved in the case in any way.
[2] See United States ex rel. Carter v. Halliburton Co., 866 F.3d 199, 203 (4th Cir. 2017); United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009); Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004).
