First Circuit Oral Argument Considers The Proper Standard Governing The False Claims Act’s 'First-To-File' Rule

The United States Court of Appeals for the First Circuit recently heard oral arguments in United States ex rel. Heineman-Guta v. Guidant Corp., et al. (12-1867). During oral argument, the panel considered, among other issues, the standard for evaluating whether a complaint was barred under the False Claims Act's ("FCA") "first-to-file" rule, and in particular, whether a first-filed complaint must satisfy Fed. R. Civ. P. 9(b) in order to trigger the rule. This same issue is the basis for a recent circuit split among certain federal Courts of Appeals, with the Sixth and Ninth Circuits on one side, and the D.C. Circuit on the other. The decision in Heineman-Guta could ultimately align the First Circuit with one of those stances, or potentially carve out a new, third position altogether.

Circuit Split Surrounding the First-To-File Rule

Under the first-to-file rule, when an individual files an action, no person other than the government may bring a related action based on the facts underlying the pending case. See 31 U.S.C. § 3730(b)(5). In the last decade, both the Sixth and Ninth Circuits have refused to apply the first-to-file bar when the first-filed complaint failed to satisfy Rule 9(b)'s heightened particularity requirement, reasoning that a deficient complaint could "not properly qualify as a 'pending action'" under the FCA. United States v. ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 516 (6th Cir. 2009) (internal citations omitted); see also Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 (6th Cir. 2006); Campbell v. Redding Med. Ctr., 421 F.3d 817, 825 (9th Cir. 2005).

However, in 2011, the D.C. Circuit departed from this approach and expressly declined to follow the Sixth Circuit, explaining that the language of the FCA's first-to-file provision does not incorporate Rule 9(b) and requires only an earlier-filed, pending action. United States ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1210 (D.C. Cir. 2011). The Court in Batiste distinguished the purpose of Rule 9(b)'s pleading requirement, to protect defendants from baseless suits, from the purpose of the FCA's first-to-file rule, to bar similar actions that offer the government little new material information about fraudulent conduct. The Court also expressed concern that using Rule 9(b) as a trigger for the first-to-file bar would require two separate courts to determine whether the first-filed complaint satisfies Rule 9(b), giving rise to potential problems, particularly if...