Opinion ID: 171887
Heading Depth: 3
Heading Rank: 3

Heading: Structure of FCA

Text: Looking at the first-to-file bar in the context of the larger FCA shows how odd a notice-based readily identifiable standard would be. That standard, after all, is how we judge whether the public disclosure bar of § 3730(e)(4) has been triggered. Even without the first-to-file bar, a qui tam complaint filed by a different relator would qualify as a public disclosure and would bar suit against a defendant who, though not named in the complaint, was nonetheless implicated in the fraud. The public disclosure bar already removes jurisdiction from suits brought by relators who simply feed off another relator's complaint and offer no useful information to government officials who should already be on notice of the fraud. Applying that standard to the first-to-file bar will do no more to weed out opportunistic relators than the public disclosure bar already does. What that standard would do if applied in the first-to-file bar context, however, is bar some legitimate relators who are the original source of the information. Congress carefully calibrated § 3730(e)(4) so that it excludes relators when publicly disclosed information was already sufficient to put the government on the trail of the fraud, but then retains jurisdiction for those relators whose suits were based on their own direct or independent knowledge. This original source exception acknowledges that not every relator whose suit would be barred by the public disclosure bar is a parasite. Often, the suit is the result of their own independent information. Allowing an original source to bring an action even when the government should be on notice of the fraud serves the purposes of the FCA by increasing valid enforcement actions. The government could lack the resources (or, indeed, the political will) to pursue a claim, even if it has been set on its trail. The government might lack sufficient evidence of its own to win in court. In these cases, qui tam suits provide a valuable way to deter false claims and compensate the government for its lost revenue. So long as the relator can meet the original source standard of § 3730(e)(4)(B), he can proceed with his suit and further the goal of citizen-assisted enforcement. The first-to-file bar, in contrast, lacks an original source exception. If we broadened the first-to-file bar to reach all pending actions that would qualify as public disclosures, we would obliterate the original source exception whenever the public disclosure is a pending qui tam suit. Congress specifically identified allegations disclosed in civil hearings as public disclosures that are subject to the original source exception. To remove the original source exception whenever the civil hearing is the result of a qui tam suit would remove jurisdiction from a significant swath of non-opportunistic claims. We would lose the value of valid enforcement action in the process, and false claims would go unremedied. Requiring a common identity between defendants when applying the first-to-file bar makes more sense within the overall structure of the FCA. While the bar does eliminate opportunistic relators, most of these relators would be eliminated by the public disclosure bar anyway. Its true value lies in protecting the recovery of the first relator who files, even when other legitimate relators might exist with direct and independent knowledge of their own. This maintains the monetary incentive to bring a qui tam action by avoiding division of the spoils. It also encourages a relator to hurry up and file. When the pending action is against an entirely different defendant, however, the two relators are not fighting over the same spoils. The first relator's recovery remains unaffected whether the second relator files or not. If that second relator brings nothing to the table that the first suit had not already offered, then his suit will be barred under the public disclosure bar; otherwise, the purposes of the FCA are best vindicated by allowing his suit to proceed. The fact that § 3730(b)(5) applies only when another qui tam action is pending makes a notice-based standard even more dubious. If the first-to-file bar had been meant simply as a more draconian public disclosure bar, Congress would not have limited it to pending actions. While filing the complaint might put the government on notice, and while the government might remain on notice while the action is pending, the government does not cease to be on notice when a relator withdraws his claim or a court dismisses it. And yet, if that prior claim is no longer pending, the first-to-file bar no longer applies. The pending requirement much more effectively vindicates the goal of encouraging relators to file; it protects the potential award of a relator while his claim remains viable, but, when he drops his action another relator who qualifies as an original source may pursue his own. The disparate methodologies that courts use to analyze the two bars shows a further difference. The first-to-file bar is designed to be quickly and easily determinable, simply requiring a side-by-side comparison of the complaints. See Grynberg, 390 F.3d at 1279; United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 235 n. 6 (3d Cir.1998) (Because we may decide whether the later complaints allege the same material elements as claims in the original lawsuits simply by comparing the original and later complaints, further factual development is unnecessary.). The public disclosure bar, in contrast, will often require the court to look beyond the face of the public disclosure itself. When a court determines whether a disclosure was sufficient to put the government on the trail of the fraud, it considers not only what was said in the disclosure, but also whether the government had the ability to then investigate the potential fraud. The nature of the relationship between the government and the defendants, the level of oversight exercised by the government, and the number of potential wrongdoers will be relevant to the government's ability to uncover the fraud and will rarely be evident on the face of the disclosure itself. See, e.g., In re Natural Gas Royalties Qui Tam Litigation, No. 06-8099, at 14-15. If we were to adopt the same notice-based standard for the first-to-file bar that we use for the public disclosure bar, we would also have to change the way courts examine first-to-file challenges. Doing so would add cost and time to what should be a straightforward process.