Once The Whistle Has Sounded: Courts Should Aggressively Enforce The False Claims Act's First-To-File Bar

The False Claims Act's ("FCA") first-to-file bar—31 U.S.C. 3730(b)(5)—encourages a race to the courthouse to reward a qui tam relator who promptly discloses fraud against the government. The rule creates an incentive for relators to promptly alert the government to the essential facts of a fraudulent scheme, by allowing only the first to report the scheme to share in any reward recovered. The rule establishes a jurisdictional bar by discouraging additional lawsuits based on the same facts because the follow-on suits do not enhance the government's ability to investigate and prosecute fraud. Further, allowing multiple suits would drain the government's already limited resources without creating potential for additional recovery.

Numerous courts, however, have perverted the purpose of the rule, instead allowing an infinite number of duplicative claims, as long as no prior claim is pending at the time of filing. The United States Supreme Court recently granted certiorari in United States ex rel. Carter v. Halliburton Co. and is set to decide whether the first-to-file bar prohibits repetitive claims or functions merely as a "one-case-at-a-time" rule.

Recent False Claims Act Statistics

have exploded. According to U.S. Department of Justice ("DOJ") statistics, 752 new cases were filed in 2013 alone. This all-time high followed year over year growth since 2008: 379 cases were filed in 2008, 433 in 2009, 575 in 2010, 638 in 2011, and 647 in 2012.

The reasons are not surprising. Congress has repeatedly acted to make it easier to file FCA suits. The financial incentive to initiate false claims and whistleblower cases is staggering. FCA relators receive 15 to 30 percent of a judgment or settlement. With the government having recovered nearly $3.8 billion in federal false claims cases in fiscal year ("FY") 2013, $5 billion in FY 2012, and more than $37 billion since 1986, relators are reaping substantial rewards. In 2013, whistleblowers were paid more than $300 million. Their lawyers receive statutory attorneys' fees paid by the defendant and also typically have a substantial contingent interest in the relator's recovery.

In the face of these incentives, "'[t]he primary function of a qui tam complaint is to notify the investigating agency, i.e. the Department of Justice,' and a qui tam complaint 'serves first and foremost as notice to the Attorney General that he should investigate the allegations.'" U.S. ex rel. Folliard v. Synnex Corp., 798 F. Supp. 2d 66, 71 (D.D.C. 2011) (emphasis in original) (quoting U.S. ex rel. Folliard v. CDW, 722 F. Supp. 2d 37, 42 (D.D.C. 2010)). Thus, the FCA contains an "exception-free" jurisdictional bar that states, "[w]hen a person brings an action under this subsection, no person other than the...