2nd Circuit: First-To-File Bar Cannot Be Avoided by Amending FCA Complaint

The Second Circuit Court of Appeals recently held that a violation of the False Claims Act’s “first‐to‐file” bar—which prohibits the filing of a ʺrelated actionʺ based on the same facts underlying an already-pending False Claims Act case—cannot be cured by filing an amended complaint after the first‐filed action is no longer pending.   Although this was a question of first impression in the Second Circuit, the First and D.C. Circuits were already split on this issue.

In the underlying case, the relator filed an FCA claim against his employer, a pharmaceutical company, for allegedly instituting a kickback scheme that caused federal and state governments to “make overpayments of Medicare, Medicaid, and other benefits.”  At that time, there were two other qui tam actions pending which alleged similar FCA violations.  Both were dismissed in 2012 for failure to properly serve the pharmaceutical company.  The relator filed an amended complaint in 2016 and the company moved to dismiss, claiming that the action should be dismissed pursuant to the “first-to-file” bar.

The district court held that the first‐to‐file bar applied in this case, but that dismissal of the relator’s claims was not required because there were no pending related actions when the complaint was amended.  The Second Circuit reversed, ruling that a relator cannot maintain his qui tam suit by amending an already-untimely complaint.  The court reasoned that permitting the bar to be cured by an amended or supplemental pleading would “pose serious administrative concerns”—like anomalous results among similarly-situated relators due to individual judges’ idiosyncrasies—and “disrupt the orderly operation of the FCA.”

With this opinion, the Second Circuit joins the D.C. Circuit in its circuit split with the First Circuit.  The First Circuit held that applying the first-to-file bar in cases where the relator has amended a later-filed petition was “untenable.”  The D.C. Circuit and Second Circuit, by contrast, have held that amended complaints filed after an already-pending FCA case are blocked by the first-to-file bar and that such untimely filings are “incurably flawed from the moment [of filing].”

The case is United States ex rel. Wood v. Allergan.