1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) UNITED STATES OF AMERICA ) ) ex rel. ) ) BRADY FOLLIARD, ) ) Plaintiff-Relator, ) Ci vil Action No. 07-2009 (ESH) ) v. ) ) CDW TECHNOLOGY SERVICES, INC., and ) CDW GOVERNMENT, INC., ) ) Defendants. ) ) MEMORANDUM OPINION Plaintiff-relator Brady Folliar d (“relator”) brings this qui tam action under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq ., on behalf of the United States against defendants CDW Technology Services, Inc. (“CDWTS”) and CDW Government, Inc. (“CDWG”) (collectively “CDW”). Defendants now move to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), arguing that another qui tam complaint, filed two years before the instant complaint, deprives th e Court of subject matter jurisdiction under the “first-to-file” bar of 31 U.S.C. § 3730(b)(5). For the reasons discussed herein, defendant’s motion will be granted. BACKROUND The Court need not repeat the facts and proce dural history previously set forth in a prior Memorandum Opinion, see United States ex rel. Follia rd v. CDW Tech. Servs., Inc. , No. 07-CV-2 2009, 2010 WL 1541224, at *1-*3 (D.D.C. Apr. 21, 2010), but will limit its discussion to those facts that relate only to this motion. I. THE LIOTINE ACTION In 2005, Joseph Liotine filed a qui tam suit under the FCA against CDWG in the U.S. District Court for the Southe rn District of Illinois. See Compl., United States ex rel. Liotine v. CDW-Government, Inc. , No. 05-CV-033 (S.D. Ill. filed Ja n. 19, 2005) (“Liotine Compl.”). Paragraph 70(F) of the Liotine complaint alle ges that CDW violated the FCA in part by [s]elling non trade compliant items such as certain Tektronix printers (from 1999 to 2001) and accessories which originated from non trade compliant countries. While the government could purchase such items through an open market card, the items could not be listed in the GSA schedule. Despite this, Defendant knowingly listed approximately 20-25 similar items (such as certain HP backup tapes) which were created or assemb led in non-trade compliant countries. Because Defendant deliberately placed ev ery item into one database, trade compliant and non trade compliant goods were commingled. Id. ¶ 70(F). II. THE INSTANT MOTION Relator Folliard filed the instant suit in 2007. The gravamen of Folliard’s complaint is that from 2007 to the present, CDW submitted false claims to the government by selling Hewlett-Packard (“HP”) computer products a nd supplies in contrave ntion of the Trade Agreements Act (“TAA”), 19 U.S.C. §§ 2501 et seq. , through the GSA Advantage and Solutions for Enterprise-Wide Procurement (“SEWP”) websites maintained by the General Services Administration (“GSA”) and the National Aer onautics and Space Administration (“NASA”), respectively. As alleged in the complaint, when federal agencies make purchases for public use pursuant to acquisition contracts, they may only buy products from “designated” countries as specified in the TAA and its related regulations. See Folliard , 2010 WL 1541224, at *1. The3 Court previously dismissed Folliard’s claims relating to the GSA procurement portal under Federal Rule of Civil Procedure 12(b)(6). See id. at *14. Defendants now argue that Folliard’s laws uit is barred under 31 U.S.C. § 3730(b)(5), which provides that “no person other than the Go vernment may . . . bring a related action based on the facts underlying” an earlier-filed qui tam action. In response, Folliard argues that his complaint is distinguishable from Liotine’s because they allege different types of fraud involving different federal contracts and agencies. ( See Pl.’s Opp’n to Defs.’ Mo t. to Dismiss [“Pl.’s Opp’n”] at 2, 5.) The United States, which has not intervened in this case, filed a statement of interest that largely echoes Folliard’s position. Defendants re spond that Folliard’s argument elevates form over substance, and that inlight of the analysis of § 3730(b)(5) in United States ex rel. Hampton v. Columbia/HCA Healthcare Corp. , 318 F.3d 214 (D.C. Cir. 2003), Folliard’s claims are barred because they are based on the “sam e material elements of fraud” as Liotine’s. See id. at 217. ANALYSIS The parties agree that Hampton ’s analysis of th e first-to-file rule governs the instant motion, but defendants advocate fo r dismissal by arguing that Hampton is controlling, while relator retorts that Hampton is distinguishable. Applying the controlling law to the allegations by Folliard and by Liotine, the Court is persuaded that Hampton and the statutory text require dismissal of Folliard’s claims.
In Hampton , the D.C. Circuit found that the plaintiff’s FCA qui tam action, in which she alleged that the defendants had engaged in Me dicare home health care billing fraud, was barred by an earlier-filed action th at alleged a similar fraudulent scheme by one of the same defendants.
See 318 F.3d at 218-19. The Court of Appeals c oncluded that § 3730(b)(5) served to bar4 “‘actions alleging the same material elements of fraud ’ as an earlier suit, ev en if the allegations [of the later-filed complaint] ‘incorporate somewhat different details.’” Id. at 217 (quoting United States ex rel. Lujan v. Hughes Aircraft Co. , 243 F.3d 1181, 1189 (9th Cir. 2001)) (emphasis added). In so doing, the Court reject ed “another possible test, one barring claims based on ‘identical facts.’” Id. at 218. Acknowledging that ther e is no bright line rule for determining whether differences between compla ints are “material,” the Court held that § 3730(b)(5) bars a subsequent actio n if it contains “merely variations” of the fraudulent scheme described in the first action. Id. Here, Folliard’s complaint alleges procurem ent fraud related to both the GSA and NASA

contracts. 1 He claims that CDW submitted false clai ms and made false statements with respect to HP products listed for sale on the GSA Adva ntage and SEWP websites, in that CDW falsely listed those products as originati ng in the United States or as T AA-compliant when, in fact, the products did not originate here or in any other designated country. ( See Am. Compl. ¶¶ 19-70, 73-75, Exs. 1A-1B; see also Pl.’s Opp’n at 7-8.) As Folliard alleges, these mislistings would be material because, by the express terms of its GSA contract and related federal acquisition regulations, CDWG “certified that it would only sell end products under these contracts to the United States Government that or iginate in designated countries, ” and that it would not sell end products that originate in non-desi gnated countries such as Chin a, India, and Malaysia. (Am. Compl. ¶ 17.) Similarly, SEWP allegedly requ ires vendors to correctly indicate a product’s country of origin so that NASA contracting officers can determine the TAA’s applicability to that product on a case-by-case basis. ( See id . ¶ 23.) Liotine’s complain t also alleges that CDWG

1 Although the Court has dismi ssed Folliard’s GSA-related claims under Rule 12(b)(6), this is not relevant under § 3730(b)(5), which looks only to wh ether a later-fil ing relator has “br[ought] a related action.” Thes e GSA claims clearly would have been barred by the first-tofile rule had the instant jurisdictional moti on been filed before the Rule 12(b)(6) motion.5 listed and sold HP products on the GSA website that were not TAA-compliant, 2 but unlike Folliard, Liotine does not allege that CDWG misrepresented thos e products as TAA-compliant. Rather, CDWG’s claims were false because it had certified to GSA that it would not sell noncompliant products through the GSA portal. Theref ore, according to Folliard, the fact that the fraudulent scheme alleged by Liotine did not involve misrepresentations about products’ countries of origin means that Liotine alleged a materially different type of fraud than Folliard does. ( See Pl.’s Opp’n at 4-5.) In light of Hampton , the Court disagrees. As the D.C. Circuit noted in Hampton , the “material elements” of a typical FCA claim – such as Folliard’s – are that (1) the defendant presented a claim to the government, (2) the claim was false, and (3) the defendant knew that the claim was false. See 318 F. 3d at 218 (citing 31 U.S.C. § 3729(a)(1)-(3) (2002)). The Court of Appeals then compar ed the text of the plaintiff’s complaint and the earlier-filed complaint to determine if their differences were material. The plaintiff’s complaint alleged, inter alia , that the defendants “submitted improper bills for services for her mother and other patients” by “bill[ing] for services that we re miscoded; already paid for; performed by others; [or] never administered,” and by billing for “supplie s and medications that were unnecessary or never received . . . .” Id at 219. The earlier-filed complaint contended that one of the defendant’s “home healthsubsidiaries billed the government for se rvices that did not meet the Medicare eligibility criteria, for undocumented services, and for services not medically necessary.” Id. Although the two complaints differed slig htly in some of the types of billing fraud alleged ( e.g. , “miscoded” bills versus “undocumente d” services), the Court of Appeals

2 Although the Liotine complaint does not explicitly reference the TAA, the Court agrees with defendant that by including phrases such as “non-trade compliant countries,” Liotine put the government on notice that CDW was allegedly vi olating the requirements of the TAA with respect to the sale of HP products. ( See Reply in Supp. of Defs.’ Mo t. to Dismiss [“Defs.’ Reply”] at 4 n.4.)6 found that both sets of allegations established th e same material elements of fraud, and that the plaintiff’s claims merely liste d additional examples of how th e common defendant defrauded the government within the context of home health services. See id. at 218-19. Hampton thus counsels that this Court must comp are the Liotine and Folliard complaints at a sufficiently high level of generality, becaus e Folliard’s later-filed complaint will not pass muster by merely providing additional details about “the nature and extent of [the] fraud in the provision of” a given set of services ( i.e. , government procurement serv ices), even if the manner of the later-alleged fraud “varie[s] greatly . . . .” Id . at 219. Here, both Liotine and Folliard allege that (1) CDWG presented a claim to th e government related to HP products listed through a procurement portal; (2) the claim was false by vi rtue of CDWG’s failure to adhere to the requirements imposed upon government contract ors in accordance with the TAA and related regulations; and (3) CDWG knew the claims were false. The difference between Liotine’s allegations of non-compliant lis tings and Folliard’s allegations of non-compliant listings that were misrepresented as compliant is therefore immaterial. Folliard ’s complaint merely alleges a variation on how CDW defrauded the government under the TAA in the course of fulfilling HP procurement orders, much as the Hampton plaintiff merely alleged ad ditional examples of how the defendant there had defrauded the govern ment under Medicare vis-à-vis home health services. Indeed, to credit Folliard’s argumen t under the “material elements” test would come dangerously close to adopting th e “identical facts” test that was explicitly rejected by Hampton

. The United States and Folliard also argue that the latter’s allegations are distinguishable from Liotine’s because they involve “completely different contracts and completely different agencies,” unlike the two complaints at issue in Hampton , which both asserted the same material elements fraud in the context of home health serv ices. (U.S. Second Statem ent of Interest at 47 (“U.S. Stmt.”); see also Pl.’s Opp’n at 11-12.) No court appear s to have squarely addressed this question, 3 but the United States sugges ts that the different procurem ent contracts and contracting agencies are relevant because the critical ques tion is not whether the gov ernment as a whole was on notice of fraud related to the de fendant, but rather whether “the administrating agencies themselves were on notice of the potential fraud in c onnection with their respective contracts.” (U.S. Stmt. at 4 n.3 (emphasis added).) Howeve r, the text of § 3730 and the statute’s underlying policies do not support the creation of a distinction between the two complaints on this basis. 4 Section 3730(a), entitled “Respons ibilities of the Attorney General,” pr ovides that “[t]he Attorney General diligently shall inve stigate a violation under sec tion 3729,” and that “[i]f the Attorney General finds that a person has violated or is violating section 3729, the Attorney Generalmay bring a civil action under this section against the pe rson.” 31 U.S.C. § 3730(a) (emphases added). This language strongly sugge sts that once a relator has alleged, in the

3 Compare United States ex rel. Pra tt v. Alliant Techsystems, Inc. , 50 F. Supp. 2d 942, 950 (C.D. Cal. 1998) (stating in dicta that “a new defendant and different contracts” would “preserve the Court’s jurisdiction” under the first-to-file bar), with Hyatt v. Northrop Corp. , No. 87-CV-6892, 1989 U.S. Dist. LEXIS 18941, at *4 (C.D. Cal. Dec. 27, 1989) (dismissing, without analysis, allegations under first-to-file bar despite different government contract underlying some of the la ter-filed claims).

4 In addition, the Court’s prior opinion suggest s that each procurement contract is only material to the elements of Folliard’s claims b ecause it is associated with a specific website where defendants allegedly mislisted the HP products at issue. The Court previously determined that each agency’s procurement website represents the “place” (if only in cyberspace) where part of the alleged fraud took place. See Folliard , 2010 WL 1541224, at *8. Thus, where Liotine alleged that defendants listed non-compliant items “on the GSA schedule” by placing them “into one database,” see Liotine Compl. ¶ 70(f), Folliard allege d that defendants listed non-compliant items in that same GSA location as well as another, SEWP. However, Hampton clarifies that where a later-filed complaint adds different lo cations for the alleged fraud, these “are not differences in the material elements of th e fraud.” 318 F.3d at 218 (rejecting later-filing plaintiff’s argument that her complaint wa s not barred because it alleged fraud by common defendant’s subsidiary in Georgia, while first-filed complaint alle ged fraud in other states but not Georgia); see also, e.g. , United States ex rel. Branch Consultants v. Allstate Ins. Co. , 560 F.3d 371 (5th Cir. 2009) (holding that later-filed case “could not avoid the precl usive effect of [the first-filed case] by focusing on additional instan ces of fraud occurring in other geographic locations”).8 government’s name, that a defendant submitted false claims to any federal governmental entity, this filing serves first and foremost as notice to the Attorney General th at he should investigate the allegations. Accordingly, th e statutory language suggests th at the primary function of a qui

tam complaint is to notify the investigating agency, i.e. , the Department of Justice (“DOJ”). Cf. United States ex rel. Batty v. Amerigroup Illinois, Inc. , 528 F. Supp. 2d 861, 874 (N.D. Ill. 2007) (“The allegations in [the ear lier-filed action] of which the government had notice and an opportunity to investigate should be considered in determ ining whether Plaintiff’s case is duplicative [under § 3730(b)(5 )].” (emphasis added)); United States ex rel. Chovanec v. Apria Healthcare Group Inc. , 606 F.3d 361, 2010 U.S. App. LEXIS 10200, at *8-*9 (7th Cir. 2010) (explaining that § 3730(b)(5) is intended to bar “secondary suits th at do no more than remind the United States of what it has learned from the initial su it,” because “[t]he author of the fraud won’t escape when the first suit ( or the ensuing federal investigation ) tells the agency everything it needs to know” (emphases added)). 5 Moreover, the policy underlying § 3730 militate s against accepting relator’s argument.
In Hampton , the D.C. Circuit noted that the history of the False Claims Act bears heavily on interpreting the first-to-f ile bar because it “demonstrates repeat ed congressional efforts to walk a fine line between encouraging whistle-blowing a nd discouraging opportunistic behavior.” 318 F. 3d at 218. The Court of Appeals therefore conclude d that § 3730(b)(5) “mus t be analyzed in the context of these twin goals of rejecting suits which the government is capable of pursing itself, while promoting those which the government is not equipped to bring on its own.’” Id. (quoting United States ex rel. Springfield Terminal Ry. v. Quinn , 14 F.3d 645 (D.C. Cir. 1994)). For this

5 Apria ’s passing reference to “tell[ing] the ag ency everything it n eeds to know” might seem to support the United States’ argument about the importance of noti ce to the administering agency, but Apria – like Hampton – considered multiple suits alleging Medicare billing fraud and had no occasion to consider th e precise question presented here.9 reason, courts must strive to minimize “duplicativ e claims” that “do not help reduce fraud or return funds to the federal fisc, since once the government knows the essential facts of a fraudulent scheme, it has enough information to discover related frauds.” United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs. , Inc., 149 F.3d 227, 234 (3d Cir.1998). As this Court has recognized, “[p]ermitting infinitely fine distinctions among complaints has the practical effect of dividing the bounty among mo re and more relators ” by constricting how broadly a court will construe the fraud alleged in – and thus the potential recovery on – the firstfiled complaint, “thereby re ducing the incentive to come fo rward with information of wrongdoing.” United States ex rel. Ortega v. Columbia Healthcare, Inc ., 240 F. Supp. 2d 8, 12 (D.D.C. 2003). Thus, the purpose of the first-to-file bar is not to enable the government to intervene at its discretion in materially similar fraud actions, but to protec t the first-filed relator precisely in order to incentivi ze private citizens to bring inform ative claims under the FCA. To permit Folliard’s suit would contravene th ese statutory policies. Folliard never worked for the defendants, and his complaint contains no “insider” information that a DOJ attorney who was already investigating Liotine’s complaint coul d not have learned. Rather, Folliard merely reiterated Liotine’s core allegation that CDWG was making false claims related to federal procurement of HP products. It is irrelevant “whether the United States put[] those facts to their best use. The allegations of the [ Liotine ] suit[] are what they are . . . .” Chovanec , 2010 U.S. App. LEXIS 10200, at *12. Rather, the que stion is whether Follia rd’s lawsuit alleges a “materially similar situation[] that . . . inve stigations launched in direct consequence of [Liotine’s] complaint[] would have revealed . . . .” Id. at *8 (emphasis added); cf. id. at *11 (finding later-filed action alleging billing fraud in Illi nois between 2002 and 2004 was barred by earlier-filed allegations about same defendant’s 1990s billing fraud in California and Kansas,10 despite the fact “that the United States apparently did not conduct the sort of follow-up investigation and prosecu tion that would have prevented [the defendant’s] office in Illinois from conducting an upcoding scam in the early 2000s”). It is reasonable to conclude that the govern ment, armed with Liotine’s allegations about government procurement of HP products from CDWG, was “equipped . . . on its own” to discover the extent to which defendants had other federal procurement contracts that were governed by the TAA and, in turn, whether any wrongdoing had occurred. See Hampton , 318 F.3d at 218. For example, a DOJ attorney lookin g into Liotine’s claims could have easily reviewed publicly available information to determine whether CDWG was a party to other government procurement contracts th at required TAA-compliance. See, e.g. , CDW-G, Federal Government Resources, Products and Solutions, at http://www.cdwg.com (permitting registered users to search public contract information by federal agency and specific contract) (last visited June 28, 2010); see also CDW-G Federal Government, at http://web.archive.org/web/ 20060829090124/http://www.cdwg.com/shop/profiles/federa l.asp (same, as archived on Aug. 29, 2006) (last visited June 28, 2010). The investig ating attorney could then have determined whether CDWG was listing any HP products for salethrough the procurement portals associated with those contracts. In sum, to permit Folliard’s complaint to proceed under the above circumstances would deviate from “‘the golden mean’” between offe ring “‘adequate incentives for whistle-blowing insiders with genuinely valuable information’ ” and discouraging “‘opportunistic plaintiffs who have no significant information to c ontribute of their own . . . .’” Graham County Soil & Water
Conservation Dist. v. Unite d States ex rel. Wilson , 130 S. Ct. 1396, 1406 (2010) (quoting United States ex rel. Springfield Te rminal R.R. Co. v. Quinn , 14 F.3d 645, 649 (D.C. Cir. 1994)).11 Accordingly, the Court concludes that Follia rd’s action is “based on the facts underlying” Liotine’s previously filed qui tam action, and it is therefore barred under § 3730(b)(5). CONCLUSION For the foregoing reasons, defendants’ motion is granted, and the complaint is dismissed for lack of jurisdiction. A separate order accompanies this Memorandum Opinion.

/s/ ELLEN SEGAL HUVELLE United States District Judge DATE: June 28, 2010