Court Opinion

ID: 4394356
Source: CourtListenerOpinion
Date Created: 2019-05-06 21:00:15.457938+00
Date Added: 2024-06-11T12:25:39.396795
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 17-1106

      UNITED STATES OF AMERICA; STATE OF CALIFORNIA; STATE OF
  COLORADO; STATE OF CONNECTICUT; STATE OF DELAWARE; DISTRICT OF
  COLUMBIA; STATE OF FLORIDA; STATE OF GEORGIA; STATE OF HAWAII;
   STATE OF ILLINOIS; STATE OF INDIANA; STATE OF IOWA; STATE OF
   LOUISIANA; STATE OF MARYLAND; COMMONWEALTH OF MASSACHUSETTS;
  STATE OF MICHIGAN; STATE OF MONTANA; STATE OF NEVADA; STATE OF
   NEW JERSEY; STATE OF NEW MEXICO; STATE OF NEW YORK; STATE OF
 NORTH CAROLINA; STATE OF OKLAHOMA; STATE OF RHODE ISLAND; STATE
OF TENNESSEE; STATE OF TEXAS; COMMONWEALTH OF VIRGINA; and STATE
       OF WISCONSIN, ex rel. MARK MCGUIRE, WENDY JOHNSON, and
                            RYAN UEHLING,

                           Plaintiffs,

                               v.

     MILLENIUM LABORATORIES, INC., MILLENIUM LABORATORIES OF
         CALIFORNIA, INC.; JAMES SLATTERY; HOWARD APPEL,

                           Defendants.

                          MARK MCGUIRE,

                   Cross-Claimant, Appellant,

ESTATE OF ROBERT CUNNINGHAM; RYAN UEHLING; OMNI HEALTHCARE INC.;
          AMADEO PESCE; JOHN DOE a/k/a CRAIG DELIGDISH,

                  Cross-Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Nathaniel M. Gorton, U.S. District Judge]
                             Before

                Torruella, Lynch, and Thompson,
                        Circuit Judges.

     Michael Tabb, with whom Thomas M. Greene, Ryan P. Morrison,
and Greene LLP were on brief, for appellant.
     Michael B. Bogdanow, with whom Robert Foster and Meehan,
Boyle, Black & Bogdanow, P.C. were on brief, for appellees.

                          May 6, 2019
           LYNCH, Circuit Judge.            The False Claims Act (FCA), 31

U.S.C.   § 3729    et    seq.,    authorizes       private   persons,    known   as

relators, to "bring a civil action . . . in the name of the

Government" against those who make fraudulent claims against the

United States, id. § 3730(b)(1).            When a relator brings such a qui

tam suit, the government may intervene and proceed with the action,

or it may decline to intervene and allow the relator to proceed.

See id. § 3730(b)(1)-(4), (c).

           The FCA encourages relators to bring qui tam suits by

allowing them to share in any recovery obtained for the government.

To avoid diluting this potential payout, the FCA's first-to-file

rule   prohibits    relators       other    than    the   first   to    file   from

"bring[ing] a related action based on the facts underlying the

pending action."        Id. § 3730(b)(5).

           This case arises out of the government's successful

intervention in several qui tam suits against Millennium Health

(formerly Millennium Laboratories).                Millennium settled with the

government for $227 million, setting aside fifteen percent of that

money as a relator's share.          The question on appeal is who is the

first-to-file relator and how that is determined.

           Mark    McGuire        brought    a   crossclaim    for     declaratory

judgment that he is the first to file and is entitled, under 31

U.S.C.   § 3730(d)(1),       to    the     fifteen-percent     share.      Robert

Cunningham, who had brought an earlier qui tam suit against

                                         - 3 -
Millennium, moved to dismiss the crossclaim, arguing that he, not

McGuire, was the first to file.          Finding that the first-to-file

rule was jurisdictional, and based on its review of extrinsic

materials outside of the complaints, the district court agreed

with Cunningham.      United States ex rel. Cunningham v. Millennium

Labs., Inc., 202 F. Supp. 3d 198, 209 (D. Mass. 2016). The district

court dismissed McGuire's crossclaim for lack of subject-matter

jurisdiction.   Id.

          We hold, for the first time in this circuit, that the

first-to-file   rule    is   not   jurisdictional,   reversing   earlier

circuit precedent, and we hold that we have jurisdiction over

McGuire's crossclaim.     We then describe the appropriate method for

the first-to-file analysis and hold that McGuire was the first-

to-file relator and that he has stated a claim that he is entitled

to the relator's share of the settlement.         We reverse and remand

for further proceedings consistent with this opinion.

                                    I.

A.   The False Claims Act

          President Abraham Lincoln signed the FCA into law in

1863. It was originally intended "to combat rampant fraud in Civil

War defense contracts."      S. Rep. No. 99-345, at 8 (1986).    Today,

the FCA is the federal government's "primary litigative tool for

combatting fraud."     Id. at 2.

                                   - 4 -
           The FCA imposes liability on any person who "knowingly

presents   . . .    a    false   or    fraudulent      claim    for    payment      or

approval," 31 U.S.C. § 3729(a)(1)(A), "to an officer, employee, or

agent of the United States," id. § 3729(b)(2)(A)(i).                     A relator

may enforce the FCA by bringing a civil qui tam action "in the

name of the Government."         Id. § 3730(b).

           To    bring   such    an   action,    the    relator       must   file    a

complaint under seal and must serve the United States with a copy

of the complaint and a disclosure of all material evidence.                       Id.

§ 3730(b)(2).      After reviewing those materials, the United States

may "proceed with the action, in which case the action shall be

conducted by the Government."           Id. § 3730(b)(4).         Or, "[i]f the

government does not exercise its right to intervene in the suit,

the relator may serve the complaint upon the defendant and proceed

with the action."         United States ex rel. Karvelas v. Melrose-

Wakefield Hosp., 360 F.3d 220, 225 (1st Cir. 2004), abrogated on

other grounds by Allison Engine Co. v. United States ex rel.

Sanders, 553 U.S. 662 (2008).

           The    FCA    entitles     the   relator    to   a   portion      of   any

resulting judgment or settlement.             Before the 1986 amendments to

the FCA, the relator's share in a case in which the government had

intervened was capped at "10 percent of the proceeds of the action

or settlement of the claim."          S. Rep. No. 99-345, at 41.             The FCA

now mandates a relator award in such a case of "at least 15 percent

                                      - 5 -
but not more than 25 percent of the proceeds of the action or

settlement of the claim, depending upon the extent to which the

person   substantially    contributed    to   the   prosecution   of   the

action."1   31 U.S.C. § 3730(d)(1).

            The 1986 amendments also added a significant restriction

on recoveries in qui tam suits that is relevant here: the "first-

to-file" rule in paragraph 3730(b)(5).        That paragraph provides,

"When a person brings an action under [31 U.S.C. § 3730(b)], no

person other than the Government may intervene or bring a related

action based on the facts underlying the pending action."              Id.

§ 3730(b)(5).    Legislative history shows that this rule was meant

to "clarify in the statute that private enforcement under the civil

False Claims Act is not meant to produce class actions or multiple

separate suits based on identical facts and circumstances."            S.

Rep. No. 99-345, at 25.

B.   The Complaints

            Because we hold that the first-to-file issue is to be

addressed under Federal Rule of Civil Procedure 12(b)(6), not Rule

12(b)(1), we confine our review to the pleadings and to facts

subject to judicial notice.     Haley v. City of Bos., 657 F.3d 39,

     1    When the government declines to intervene and the
relator successfully prosecutes the action, the relator may
receive up to 30 percent of the payout (with the remainder to the
United States). 31 U.S.C. § 3730(d)(2). That is not the situation
here.

                                 - 6 -
46 (1st Cir. 2011).          We limit our background discussion to facts

alleged in Cunningham's amended complaint, McGuire's original

complaint, and in the government's complaint in intervention and

settlement agreement.2

        1.        Cunningham's Amended Complaint

                  In late 2009 and early 2010, relator Robert Cunningham3

filed       qui    tam   actions   against   five   competitors   of    Calloway

Laboratories, his employer. One competitor he sued was Millennium.

                  Cunningham filed his first amended complaint4 against

Millennium on February 24, 2011.             It detailed a mechanism of fraud

arising      from     Millennium's   "Physician     Billing   Model,"   the   key

component of which was Millennium's "multi-class qualitative drug

screen," which Cunningham's complaint labels a "test kit."                    The

test kit was a urine specimen collection cup with chemical test

        2 Cunningham's amended complaint and McGuire's original
complaint are subject to judicial notice. See Zucker v. Rodriguez,
919 F.3d 649, 651 n.5 (1st Cir. 2019) (citing E.I. Du Pont de
Nemours & Co. v. Cullen, 791 F.2d 5, 7 (1st Cir. 1986) (Breyer,
J.)).    And the government's complaint in intervention and
settlement agreement are also properly before us because McGuire
attached them as exhibits to his crossclaim.
        3 Cunningham died in December 2010.      His estate has
continued to pursue his action.     For simplicity, we refer to
Cunningham and his estate as "Cunningham."
        4 Cunningham's amended complaint states, "This First
Amended Complaint does not add any facts to those contained in the
Original Complaint; rather, it removes some of the allegations
that had been contained therein."        The amended complaint's
allegations were the only allegations "pending" when McGuire filed
his suit.

                                       - 7 -
strips embedded in it.     This kit, which "c[ould] be purchased for

less than" ten dollars, "use[d] a single specimen" collected at

the point of care to detect "multiple drug classes."

          We   described     the    three   aspects   of   Cunningham's

allegations in United States ex rel. Estate of Cunningham v.

Millennium Labs. of Calif., Inc., 713 F.3d 662, 665-66 (1st Cir.

2013).   Cunningham's complaint alleged that Millennium used its

inexpensive point-of-care test kits to induce physicians into

excessive billing (Aspect One), excessive testing (Aspect Two),

and excessive confirmatory testing (Aspect Three).5 In Cunningham,

     5    We describe the first two aspects more fully. Aspect
One: Cunningham alleged that Millennium told physicians that this
test kit could "substantially increase his or her revenue."
Because the kits performed several tests at once, Millennium told
the physicians that they could "bill both government and private
health insurance companies" for several drugs tests per kit. Under
then-current government billing codes, the physicians should have
only billed for one test per test kit. Cunningham alleged that a
document distributed by Millennium "suggest[ed] each physician can
bill at least 9 units per kit."      And Cunningham alleged that
Millennium separately informed physicians that they should bill
"as many units as there are panels in the test kit." Cunningham
alleged that, under this model, physicians could bill between
$16.67 and $80 per unit and so extract per-kit revenues of between
$173.18 to $432.
     Aspect Two:   Cunningham alleged that Millennium encouraged
physicians to conduct excessive tests.       Millennium informed
physicians that, if they were to order twenty tests per day, they
could earn up to $8,640 per day.      The complaint stated that
Millennium thus "encourage[d] the physician to order more testing
than that physician would have prior to engaging in Millennium's
[point-of-care] model, and increase[d] Millennium's market share
by drawing other physicians to the practice with the hope and
promise of greater revenues."         It further alleged that
participating physicians ordered "significantly more testing for
their patients since entering the conspiracy than they did prior

                                   - 8 -
we held that Aspects One and Three were jurisdictionally barred by

the FCA's public disclosure provision, 31 U.S.C. § 3730(e)(4)(A),

because they had been "publicly disclosed" in a California state

defamation suit brought by Millennium against Calloway.         713 F.3d

at 671.     We then vacated the district court's order dismissing

Aspect Two of Cunningham's claim and remanded that claim for

further proceedings.    Id. at 676.       On remand, the district court

dismissed    Aspect   Two    of   Cunningham's    claim   for   lack     of

particularity under Federal Rule of Civil Procedure 9(b) and for

failure to state a claim under Rule 12(b)(6).         United States ex

rel. Estate of Cunningham v. Millennium Labs. of Cal., No. 09-

12209-RWZ, 2014 WL 309374, at *2 (D. Mass. Jan. 27, 2014).             That

decision is currently on appeal.

            Only Aspect Three is potentially relevant to the first-

to-file issue here.6        Cunningham alleged that if the initial

qualitative test uncovered any of the tested drugs, that test

"w[ould] need to be followed up by a quantitative screen" and then

to participating in the conspiracy with Millennium." The alleged
fraud consisted of Millennium's promotion of this billing model
and physician defendants' misrepresentation of the medical need
for the tests performed.
     6    McGuire argues, based on Campbell v. Redding Medical
Center, 421 F.3d 817 (9th Cir. 2005), that because we found Aspect
Three to be jurisdictionally barred, it does not count as a
"pending" claim for first-to-file purposes.      We do not address
this argument because we find McGuire was the first-to-file relator
even if we consider Aspect Three of Cunningham's complaint.

                                  - 9 -
"confirmed    by    another    method."      The   complaint   alleges    that

Millennium's       point-of-care   model     led   to   "significantly    more

testing," including "confirmatory tests."

             Cunningham       alleged     generally     that   this      scheme

"increas[ed] the revenues of the [physician] defendants at the

expense of the government and private health insurance programs"

and "significantly increase[d] Millennium's revenues and market

share."   Cunningham's amended complaint never mentions the terms

"custom profiles" or "standing orders" or describes any fraudulent

schemes by Millennium associated with either.

             Cunningham filed three disclosures of material evidence

to the government in December 2009, September 2010, and February

2012, respectively.

     2.      McGuire's Original Complaint

             Mark McGuire, appellant here, filed his original qui tam

complaint on January 26, 2012.            It focused not on point-of-care

testing, the first stage of urinary drug testing, as Cunningham's

complaint had done, but on confirmatory (or quantitative) testing,

a later stage.       McGuire alleged that after a point-of-care test

discloses an unexpected drug (or shows the lack of an expected

drug), a physician can order confirmatory tests.               These tests,

which require sophisticated equipment and so can be expensive,

determine how much of the substance is present (or not).

                                    - 10 -
            McGuire alleged that Millennium engaged in a scheme that

resulted in unnecessary confirmatory tests being performed and

billed to the government after the point-of-care tests. Millennium

persuaded   physicians    to    execute    "custom   profiles,"   which   are

standing orders for a battery of confirmatory tests on every urine

sample, regardless of whether the point-of-care testing showed a

need.   McGuire alleged that "even if [a point-of-care test] comes

back completely negative, . . . based on the customized profile

Millennium has gotten the physician's office to sign, Millennium

runs 10 confirmatory tests."       Millennium profited because "[t]hese

10 unnecessary tests are then billed to Medicare, Medicaid or other

federal plans."       And physicians and hospitals who signed up for

"custom profiles" profited because they could bill the government

for the unnecessary tests.

            This scheme was, according to McGuire's complaint, a

matter of corporate policy.              McGuire alleged that Millennium

supervisors required their sales representatives to aggressively

market standing orders to physicians -- the representatives would

return time and time again until the physicians executed custom

profiles for at least ten confirmatory tests.             Some physicians,

with Millennium's participation, included up to twenty-five tests

in their profiles.

            McGuire    also    alleged    that   Millennium   provided    free

point-of-care cups (test kits) to physicians to induce them to

                                   - 11 -
send confirmation testing orders to Millennium. This tactic helped

Millennium     gain    market       share   in    a    highly    competitive   and

potentially quite lucrative business.

     3.      The Complaint and Settlement Agreement of the United
             States

             In December 2014, the government announced its intention

to intervene in McGuire's action (as well as the actions of three

other relators, none of whom were Cunningham).                      It filed its

complaint in intervention in those actions on March 19, 2015.                  The

complaint     describes      two    fraudulent        schemes:   (1) Millennium's

submission of claims for excessive and unnecessary urine drug

testing ordered by physicians through standing orders without an

individualized assessment of patient need; and (2) urine drug

testing referred by physicians who received free point-of-care

testing supplies, in violation of the Stark Act and the Anti-

Kickback Statute.         Millennium used these schemes to "knowingly

submit[] many millions of dollars' worth of false claims" to the

government.

             The United States complaint in intervention alleges that

"[a] core element of Millennium's business model was the use of

physician standing order forms."                 These standing orders led to

unnecessary drug tests conducted "regardless of each patient's

individualized        need    and     condition."          Millennium    required

physicians to use these forms or be cut off from processing

                                       - 12 -
specimens,    set    and    enforced    testing     thresholds    for    standing

orders, and promoted routine confirmatory testing of even negative

point-of-care       test    results.       This     standing    order    practice

generated unnecessary testing, including confirmatory testing for

rarely abused drugs, even when point-of-care test results showed

no need for follow-up testing.

             The government's complaint also alleged that Millennium

engaged in an illegal kickback scheme involving point-of-care

cups.     After the Center for Medicare and Medicaid Services (CMS)

changed     the   reimbursement        structure     for   point-of-care       cups

effective April 2010, "the [point-of-care] test cups were no longer

a source of significant reimbursement revenue for physicians."                  In

response,     Millennium      "dramatically"       expanded     its    "Free   Cup

program."     Under this program, Millennium distributed $5 million

worth of point-of-care test cups for free to physicians in exchange

for "referrals" to Millennium.             A physician "refers" a test by

sending a sample for confirmatory testing.             The government alleged

that this program violated the Stark Law and the Anti-Kickback

Statute, which require point-of-care test cups to be sold at fair

market value.

             On   October    16,   2015,   the     government    and    Millennium

reached a settlement under which Millennium agreed to pay $227

million plus interest to resolve these claims.              The settlement set

aside fifteen percent of the recovery as a relator's share, but

                                       - 13 -
did not resolve which relator was entitled to the award.7                 The

agreement    provided    that    the     district    court   "shall   retain

jurisdiction as to . . . [r]elators' claims for a share of the

proceeds of the Settlement Amount."            The district court dismissed

only the relators' claims against Millennium on March 24, 2016 and

stated that the "[r]elators' respective claims, between and among

themselves, for a portion of the agreed-upon 'relator share' of

the Settlement Amount . . . are not dismissed and will remain

pending."

C.   Post-Settlement Procedural History

            On October 23, 2015, McGuire filed a crossclaim for

declaratory relief, asserting that he was the first to file a

complaint    that   alleged     the     essential   facts    underlying   the

government's complaint in intervention and settlement agreement.

He argued that he was entitled to the entire fifteen-percent

relator's share because he was the first-to-file relator.8                On

December    7,   2015,   Cunningham        moved    to   dismiss   McGuire's

crossclaim, arguing that he, not McGuire, was the first to file.

     7    The settlement also preserved the relators' rights to
seek reasonable costs and attorney's fees and expenses under 31
U.S.C. § 3730(d)(2) and preserved some relators' employment-
retaliation claims.
     8    McGuire brought this crossclaim against Cunningham and
several other relators but not against Wendy Johnson, Allstate
Insurance Co., and Lawrence Spitz -- McGuire reports that he
"reached an agreement" with this last group. The cross-defendants
other than Cunningham have conceded that they filed behind McGuire.

                                      - 14 -
                 The government took no position on this issue.               It did,

however, urge the district court to confine its first-to-file

analysis to "the text of the complaints themselves, and not on any

subsequent investigation by the United States of such complaints

or any related communications."

                 On   August   19,   2016,   the    district   issued   its     order

dismissing McGuire's crossclaim.              Cunningham, 202 F. Supp. 3d at

209. The district court held, relying on this circuit's precedent,

that       the    first-to-file       rule    was    jurisdictional      and     that

Cunningham's motion to dismiss was a factual challenge to the

court's jurisdiction.           Id. at 205-06.       The district court looked

beyond the complaints to extrinsic evidence and concluded that the

first-to-file rule applied and barred McGuire's crossclaim.                      Id.

at 206.      The district court dismissed the crossclaim for lack of

subject-matter jurisdiction.               Id. at 209.    The order entered on

the docket three days later, on August 22, 2016.9

                 McGuire   moved     for     reconsideration     of     the     order

dismissing his crossclaim.            The district court denied that motion.

This appeal followed.

       9  There was no "separate document," Fed. R. Civ. P.
58(c)(2)(A), accompanying that order, so judgment entered 150 days
later, on January 19, 2017. McGuire had 30 days from then to file
his notice of appeal.     McGuire's January 20, 2017 filing was
timely. Cunningham's arguments to the contrary are meritless.

                                        - 15 -
                                      II.

               A federal appellate court normally must "satisfy itself

both of its own subject-matter jurisdiction and of the subject-

matter jurisdiction of the trial court before proceeding further."

Royal Siam Corp. v. Chertoff, 484 F.3d 139, 143 (1st Cir. 2007)

(citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541

(1986); Irving v. United States, 162 F.3d 154, 160 (1st Cir. 1998)

(en    banc)).      We   consider   whether    the   first-to-file   rule   is

jurisdictional under the Supreme Court's most recent caselaw.               On

de novo review, and in light of that precedent, we hold that the

first-to-file rule, 31 U.S.C. § 3730(b)(5), is nonjurisdictional

and that we have jurisdiction over McGuire's crossclaim.10

               "Characterizing a rule as jurisdictional renders it

unique in our adversarial system."            Sebelius v. Auburn Reg'l Med.

Ctr., 568 U.S. 145, 153 (2013).        A jurisdictional objection may be

raised at any time, even after trial.            And a trial court without

jurisdiction lacks "all authority to hear a case."11          United States

v. Kwai Fun Wong, 135 S. Ct. 1625, 1631 (2015).

       10 McGuire argues that the district court erred in holding
that his crossclaim for declaratory judgment under paragraph
3730(d)(1) is subject to the first-to-file rule. Cunningham, 202
F. Supp. 3d at 203. We need not reach this argument because even
if the first-to-file rule does not apply to McGuire's crossclaim,
it applies to his underlying action against Millennium.       And
because that action eventually gave rise to McGuire's crossclaim,
we must assure ourselves of the district court's jurisdiction.
       11       So even in a case like this one, in which seven years
have        passed since McGuire first filed his complaint, a

                                    - 16 -
            The Supreme Court has attempted to "ward off profligate

use of the term 'jurisdiction.'"       Auburn Reg'l Med. Ctr., 568 U.S.

at 153.     As such, it has held that we must apply a "readily

administrable bright line" rule and see if Congress has "clearly

state[d]"   that    the   provision   under   review   is   jurisdictional.

Arbaugh v. Y&H Corp., 546 U.S. 500, 515 (2006).

            In considering this issue, we do not write on a clean

slate.    As the district court quite properly noted, this court has

several     times    characterized      the    first-to-file      rule   as

jurisdictional.     See United States ex rel. Wilson v. Bristol-Myers

Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014); United States ex

rel. Heineman-Guta v. Guidant Corp., 718 F.3d 28, 34 (1st Cir.

2013); United States ex rel. Duxbury v. Ortho Biotech Prods., L.P.,

579 F.3d 13, 16, 33 (1st Cir. 2009).

            While we are "ordinarily 'constrained by prior panel

decisions directly (or even closely) on point,'" we are not so

bound when "non-controlling authority that postdates the decision

. . . offer[s] 'a compelling reason for believing that the former

panel, in light of new developments, would change its collective

mind."    Sánchez ex rel. D.R.-S. v. United States, 671 F.3d 86, 96

(1st Cir. 2012) (quoting United States v. Guzmán, 419 F.3d 27, 31

jurisdictional objection may result in dismissal. And that could
mean "many months of work on the part of the attorneys and the
court may be wasted." Henderson ex rel. Henderson v. Shinseki,
562 U.S. 428, 435 (2011).

                                  - 17 -
(1st Cir. 2005)).            There are several compelling reasons for such

a belief here.

                  First, new developments cast serious doubt on our prior

characterization of the first-to-file rule as jurisdictional.               In

2015, the Supreme Court decided Kellogg Brown & Root Services,

Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015), a

qui tam case.           Carter "addressed the operation of the first-to-

file bar on decidedly nonjurisdictional terms, raising the issue

after        it    decided   a   nonjurisdictional   statute   of   limitations

issue."           United States ex rel. Heath v. AT & T, Inc., 791 F.3d

112, 121 n.4 (D.C. Cir. 2015).            The clear implication is that the

Court did not consider the first-to-file rule to be jurisdictional.

Interpreting Carter, the D.C. Circuit and the Second Circuit have

both held that the first-to-file rule is nonjurisdictional.12               See

United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85

(2d Cir. 2017); Heath, 791 F.3d at 120-21.

                  This court has twice declined to reach the issue of

whether the first-to-file rule is jurisdictional when it was not

necessary to resolution of the appeal, while recognizing that

Carter affects the analysis.             See United States ex rel. Kelly v.

Novartis Pharm. Corp., 827 F.3d 5, 12 n.9 (1st Cir. 2016) ("We

        12 The Fourth Circuit has, after Carter, based on circuit
precedent,    maintained   that   the   first-to-file   rule   is
jurisdictional. See United States ex rel. Carter v. Halliburton
Co., 866 F.3d 199, 203 n.1 (4th Cir. 2017).

                                        - 18 -
assume, but need not decide, that the first-to-file bar remains

jurisdictional.     This position is not without doubt."); United

States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 6 n.2 (1st

Cir. 2015) ("[W]e have no need to consider the relator's back-up

argument that the first-to-file bar is not jurisdictional in light

of Carter.").

            Second, this circuit's prior cases labeling the first-

to-file rule as jurisdictional, all of which predate Carter,

devoted no substantive analysis to this issue. Duxbury, the oldest

case,     listed    the    first-to-file       rule           among   the     FCA's

"jurisdictional bars" only in passing as dicta.                  579 F.3d at 16.

But it did not ask, and no later First Circuit decision has asked,

if    Congress   clearly   stated   that     the    first-to-file       rule   was

jurisdictional.     Because these rulings failed to apply the Arbaugh

clear-statement test, they should be "accorded 'no precedential

effect' on the question whether the federal court had authority to

adjudicate the claim in suit."        Arbaugh, 546 U.S. at 511 (quoting

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 91 (1998)).

            And third, applying the bright line rule leads to only

one   conclusion:   the    first-to-file     rule        is   nonjurisdictional.

Neither    statutory   text   nor    context       nor    legislative       history

suggests otherwise.        See Kwai Fun Wong, 135 S. Ct. at 1632-33

(looking to text, context, and legislative history to determine

whether a statutory provision was jurisdictional).

                                    - 19 -
                As always in matters of statutory interpretation, we

start with the text.         United States v. Musso, 914 F.3d 26, 30 (1st

Cir. 2019).        Paragraph 3730(b)(5) provides that "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). As the D.C. Circuit recognized, this "language 'does

not speak in jurisdictional terms or refer in any way to the

jurisdiction of the district courts.'"               Heath, 791 F.3d at 120

(quoting Arbaugh, 546 U.S. at 515).

                We next look to context.       Paragraph 3730(b)(5) does not

speak in jurisdictional terms; nearby provisions, by contrast,

explicitly do so.        Cf. Musso, 914 F.3d at 31 (drawing a negative

inference from word choices made in neighboring statutory text).

For instance, paragraph 3730(e)(1) provides, "No court shall have

jurisdiction over an action brought by a former or present member

of the armed forces . . . against a member of the armed forces

arising out of such person's service in the armed forces."                     31

U.S.C. § 3730(e)(1).         And paragraph 3730(e)(2) states, "No court

shall have jurisdiction over an action brought . . . against a

Member     of    Congress,   a   member   of   the   judiciary,   or    a   senior

executive branch official if the action is based on evidence or

information known to the Government when the action was brought."

Id. § 3730(e)(2).        So, as the D.C. Circuit recognized, "[w]hen

Congress wanted limitations on False Claims Act suits to operate

                                     - 20 -
with jurisdictional force, it said so explicitly."                      Heath, 791

F.3d at 120.

            And finally, as a check to confirm the accuracy of our

textual analysis, we turn to legislative history.                     See Kwai Fun

Wong, 135 S. Ct. at 1633 ("[E]ven assuming legislative history

alone could provide a clear statement (which we doubt), none does

so here.").       Congress added the first-to-file rule when it amended

the FCA in 1986.      The Senate Report states that the purpose of the

first-to-file rule was to clarify that "only the Government may

intervene in a qui tam action" and that "private enforcement under

the civil False Claims Act is not meant to produce class actions

or     multiple    separate     suits   based      on     identical     facts   and

circumstances."       S. Rep. No. 99-345, at 25.                The first-to-file

rule    advances     this     goal   even   when        the    provision   is   not

jurisdictional.

            Finding Congress had made no clear statement that the

rule was jurisdictional, the D.C. Circuit held that "the first-

to-file rule bears only on whether a qui tam plaintiff has properly

stated a claim."        Heath, 791 F.3d at 121.               The Second Circuit,

relying heavily on Heath, reached the same conclusion.                  Hayes, 853

F.3d at 85-86. Given Carter, Heath, Hayes, and the Supreme Court's

clear statement rule, there is a compelling reason to believe that

prior panels would no longer view the first-to-file rule as

                                     - 21 -
jurisdictional.    For the same reasons, we now hold that the first-

to-file rule is not jurisdictional.

          Because the first-to-file rule is not jurisdictional,

the district court had subject-matter jurisdiction over McGuire's

claim against Millennium.     The district court also had subject-

matter jurisdiction over McGuire's crossclaim under 28 U.S.C.

§§ 1331 and 2201. And we have jurisdiction under 28 U.S.C. § 1291.

                                 III.

          The   remaining   question    is   whether,   under   31   U.S.C.

§ 3730(d)(1), McGuire is entitled to the relator's share of the

government's settlement with Millennium.13          In assessing this

question, we confine our review to the pleadings and to "facts

susceptible to judicial notice."14      Haley, 657 F.3d at 46.

          As we demonstrate below, the crucial component of this

question, as framed in this case, is whether McGuire was the first-

to-file relator.   Rather than remand, we address the first-to-file

     13   The district court purported to deny Cunningham's
12(b)(6) motion, but only after granting his 12(b)(1) motion. We
have noted that "if the court lacks subject matter jurisdiction,
assessment of the merits becomes a matter of purely academic
interest." Deniz v. Mun. of Guaynabo, 285 F.3d 142, 150 (1st Cir.
2002). Deciding a Rule 12(b)(6) motion after finding no subject-
matter jurisdiction is "gratuitous." Id. at 149.
     14   The district court analyzed Cunningham's motion to
dismiss as a factual challenge under Rule 12(b)(1) and so engaged
its "broad authority" to look outside the pleadings "to determine
its own jurisdiction." Valentin v. Hosp. Bella Vista, 254 F.3d
358, 363 (1st Cir. 2001).

                                - 22 -
issue as a matter of law because it has been fully briefed, because

neither party suggests that the issue requires remand, and because

the basic facts are uncontested.           See G. & C. Merriam Co. v.

Webster Dictionary Co., 639 F.2d 29, 40 (1st Cir. 1980); see also

Levy v. Lexington Cty., S.C., 589 F.3d 708, 716 (4th Cir. 2009);

LNC Invs., Inc. v. First Fid. Bank, N.A. N.J., 173 F.3d 454, 464

(2d Cir. 1999).

          Subsection     3730(d),   entitled     "Award    to   qui     tam

plaintiff," provides in relevant part:

          If the Government proceeds with an action
          brought by a person under subsection (b), such
          person shall, subject to the second sentence
          of this paragraph, receive at least 15 percent
          but not more than 25 percent of the proceeds
          of the action or settlement of the claim,
          depending upon the extent to which the person
          substantially contributed to the prosecution
          of the action.

31 U.S.C. § 3730(d)(1).      We look to whether the government's

recovery from Millennium constitutes the "proceeds of the . . .

settlement   of   the   claim"   McGuire    brought.      See   Rille   v.

PricewaterhouseCoopers LLP, 803 F.3d 368, 373 (8th Cir. 2015) (en

banc) ("[A] relator seeking recovery must establish that 'there

exists [an] overlap between Relator's allegations and the conduct

discussed in the settlement agreement.'"        (quoting United States

ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 651 (6th

Cir. 2003))).

                                 - 23 -
          To be entitled to the relator's share under paragraph

3730(d)(1), a relator must be a person who "br[ings]" "an action

under . . . subsection [3730(b)]."     31 U.S.C. § 3730(d)(1); Rille,

803 F.3d at 372 ("The relators' right to recovery is limited to a

share of the settlement of the claim that they brought.").          The

first-to-file rule bars any "person other than the Government"

from "bring[ing] a related action based on the facts underlying

the pending action."    31 U.S.C. § 3730(b)(5).      So only the first-

to-file relator can claim the relator's share of the settlement

proceedings for each claim.

          Nearly all courts share this conclusion.          See United

States ex rel. Shea v. Cellco P'ship, 863 F.3d 923, 927 (D.C. Cir.

2017) ("The first-to-file bar thereby ensures only one relator

will share in the government's recovery . . . ."); United States

ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149

F.3d 227, 231 (3d Cir. 1998) ("[N]o qui tam plaintiff may . . .

share in a government settlement if his or her allegations repeat

claims in a previously filed action."); see also United States ex

rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97, 103-06 (3d

Cir. 2000) (Alito, J.) (concluding "that a relator whose claim is

subject to dismissal under [the public-disclosure rule in 31 U.S.C.

§] 3730(e)(4)   may    not   receive   any   share   of   the   proceeds

                                - 24 -
attributable to that claim," id. at 106); Fed. Recovery Servs.,

Inc. v. United States, 72 F.3d 447, 450 (5th Cir. 1995).15

           This conclusion also aligns with the policies underlying

the first-to-file rule.      The rule is "part of the larger balancing

act of the FCA's qui tam provision, which 'attempts to reconcile

two   conflicting   goals,   specifically,   preventing   opportunistic

suits, on the one hand, while encouraging citizens to act as

whistleblowers, on the other.'"      Wilson, 750 F.3d at 117 (quoting

LaCorte, 149 F.3d at 233).     "The first-to-file bar operates on the

recognition that, because relators can bring suit without having

suffered a personal injury, countless plaintiffs in theory could

file a qui tam action based on the same fraud and then share in

the proceeds."   Shea, 863 F.3d at 927.      Allowing a follow-on filer

to siphon off the first-filed suit's proceeds "weaken[s] the

incentive to dig out the facts and launch the initial action."

United States ex rel. Chovanec v. Apria Healthcare Grp. Inc., 606

F.3d 361, 364 (7th Cir. 2010).

           To resolve the first-to-file issue here, we ask whether

Cunningham's   amended   complaint    "contained   'all   the   essential

      15  See also United States ex rel. Dhillon v. Endo Pharm.,
617 F. App'x 208 (3d Cir. 2015) (unpublished) (summarily affirming
the district court's finding that only the first-to-file relator
was entitled to the relator's share of a settlement).      But see
United States ex rel. Doghramji v. Cmty. Health Sys., Inc., 666 F.
App'x 410, 418 (6th Cir. 2016) (rejecting this conclusion).

                                 - 25 -
facts'" of the fraud McGuire alleged.16       United States ex rel. Ven-

A-Care of the Fla. Keys, Inc. v. Baxter Healthcare Corp., 772 F.3d

932, 938 (1st Cir. 2014) (quoting Heineman-Guta, 718 F.3d at 34).

While this "essential facts" standard does not require "identity

between the two complaints to trigger the first-to-file rule,"

id., the rule still may bar a different "claim even if that claim

incorporates somewhat different details," id. (quoting Wilson, 750

F.3d at 118).    The essential facts test "presents a question of

law about the statutorily required threshold for notifying the

government of the fraud alleged in the later-filed suit."             Id.

Our review is de novo.17      Id.

          We    apply   the    essential     facts   test   by   comparing

Cunningham's amended complaint and McGuire's original complaint.

See Heath, 791 F.3d at 121 ("Similarity is assessed by comparing

     16   Other circuits, such as the D.C. Circuit, preclude
recovery from not-first-to-file relators when the first-filed
complaint alleges the "material elements of fraud" at issue and
"equip[s] the government to investigate" that fraud. United States
ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1209 (D.C. Cir. 2011).
For purposes of this case, we see no difference between this
standard and the essential facts test.
     17   Cunningham argues that the settlement independently
reserved this issue for the district court to resolve as a matter
of fact, and that we must accept the district court's findings.
The premise is wrong -- the settlement says nothing of the sort.
It states only that the district court "retain[ed] jurisdiction"
over this issue, and that the relators "reserve[d] their rights
against Millennium to seek attorneys' fees, costs and expenses"
under applicable provisions. It does not displace normal first-
to-file law.

                                    - 26 -
the complaints side-by-side . . . ."); Ven-A-Care, 772 F.3d at 938

("[W]e compare the Ven-A-Care complaint to the Sun and Hamilton

complaint.");      In    re   Nat.   Gas   Royalties   Qui   Tam   Litig.    (CO2

Appeals), 566 F.3d 956, 964 (10th Cir. 2009) ("The first-to-file

bar is designed to be quickly and easily determinable, simply

requiring a side-by-side comparison of the complaints.").                First-

to-file analysis is limited to the four corners of the relevant

complaints.    See Duxbury, 579 F.3d at 33-34 (refusing to consider

allegations in a later-filed Information because the relator "had

his opportunity to [include those allegations] when he filed [his]

Original Complaint").         We conclude, based on those two complaints,

that Cunningham and McGuire do not allege similar frauds, but

allege different frauds with different mechanisms.

           We proceed claim-by-claim.             Merena, 205 F.3d at 102

("[T]he court must conduct a claim-by-claim analysis in order to

determine if section 3730(b)(5) applies.").              Two claims of fraud

are relevant here: (1) Millennium's custom profile fraud, and

(2) Millennium's point-of-care cup kickback scheme.                Cunningham's

complaint lacks all the essential elements of both claims.

           Cunningham argues that he was the first to file a claim

against Millennium for excessive and unnecessary drug testing.

But this is too general an argument.            We must look to the actual

mechanism (the "essential facts") of the fraud that Cunningham

alleged.      In   his    amended    complaint,   Cunningham       alleged   that

                                      - 27 -
Millennium's Physician Billing Model, which involved physicians

billing the government for multiple tests for each point-of-care

cup, led to "significantly more testing."               And he alleged that

this    increased   point-of-care      testing   led,     in   turn,    to    more

"confirmatory tests."       But CMS revised its reimbursement rules to

defeat such fraud, so physicians can no longer bill for multiple

tests from a single cup.        And Cunningham's amended complaint never

mentions "standing orders" or "custom profiles," as McGuire's

does.

             Cunningham's allegations do not cover the essential

elements of the fraud that McGuire described in his original

complaint.    McGuire alleged that Millennium required physicians to

execute custom profiles.        And McGuire alleged that these profiles

directed     Millennium    to    automatically    conduct       a   battery     of

confirmatory    tests     regardless   of    individual    patient     need   and

regardless of what the point-of-care test showed.                      The fraud

McGuire alleged had a different mechanism (the custom profiles)

and focused on a different stage of testing (the confirmatory

stage) than the one Cunningham described.              McGuire was the first

relator to file a claim including the essential elements of

Millennium's    custom    profile   fraud,     which    the    government     then

pursued.

             Cunningham also argues that he alleged the essential

elements of Millennium's point-of-care cup kickback scheme, the

                                    - 28 -
second       scheme   the    government   pursued.      He   says   he   "alleged

Millennium provided test kits at a nominal cost, and encouraged

doctors to bill for numerous tests rather than for just one multi-

panel test."          But Cunningham's amended complaint makes only one

mention of cost: it says that the point-of-care cups "can be

purchased for less than $10.00."            Cunningham did not allege that

this was less than fair market value.             And he did not allege that

Millennium provided the cups for free in exchange for physicians

referring confirmatory testing.              McGuire, by contrast, alleged

that        Millennium      provided   point-of-care     cups,      "a    valuable

diagnostic tool," to physicians for free to induce them to send

confirmation testing orders to Millennium.

               Again,    Cunningham's     allegations   do   not    include    the

essential elements of the fraud McGuire alleged.                    Further, the

fraud the government pursued was that alleged by McGuire.18                    The

government alleged that Millennium distributed $5 million worth of

free point-of-care test cups in exchange for the doctors referring

the cups to Millennium for confirmatory testing.                    This was an

illegal       kickback      because,    "absent   an    applicable       statutory

       18 McGuire   attached   the   government's   complaint   in
intervention to his crossclaim, so it is properly before us. In
any event, the government's complaint would be subject to judicial
notice. See Zucker, 919 F.3d at 651 n.5 (citing E.I. Du Pont de
Nemours & Co., 791 F.2d at 7 (Breyer, J.)).

                                       - 29 -
exception[, point-of-care] cups had to be sold at 'fair market

value' to comply with the Stark Law and Anti-Kickback Statute."

                   The    district   court     erred    when      it    found     that

"Cunningham's materials provided the government with 'sufficient

notice to initiate an investigation into [Millennium's] allegedly

fraudulent practices.'"              Cunningham, 202 F. Supp. 3d at 206

(quoting Ven-A-Care, 772 F.3d at 938). Mere notice -- particularly

of a different fraud than the government chose to pursue -- is not

enough.        As we made clear in Ven-A-Care, "we must ask not merely

whether the first-filed complaint provides some evidence from

which an astute government official could arguably have been put

on notice, but also whether the first complaint contained all the

essential facts of the fraud it alleges."                      772 F.3d at 938

(emphasis added) (internal citation and quotation marks omitted).

                   McGuire has established that he was the first to file a

claim alleging the essential facts of Millennium's custom profile

fraud        and    point-of-care    cup     kickback   scheme.        He   has   also

adequately pleaded that the government's recovery from Millennium

constitutes the "proceeds of the . . . settlement of the claim[s]"

he brought.19            31 U.S.C. § 3730(d)(1).

        19There is no assertion by the government or anyone else
that McGuire did not plead the conduct that formed the basis of
the claims the government ultimately settled. We need not address
the issue decided by the Eighth Circuit in Rille. See 803 F.3d at
374 (remanding for further factual development in a case in which
"[t]he government objected to [the relators'] recovery on the

                                        - 30 -
                                  IV.

          We   reverse20   and    remand   for   further    proceedings

consistent with this opinion.

ground that the relators' complaint did not plead the conduct that
formed the basis of the claims that the government ultimately
settled," id. at 371).
     20   Our holding moots McGuire's appeal         of    the   district
court's denial of his motion to reconsider.

                                 - 31 -