9th Circuit: Government-Action Bar Prohibits Relators from Bringing FCA Suit Even If Government No Longer a Party

In a recent decision, the Ninth Circuit ruled that the False Claims Act’s “government-action bar,” 31 U.S.C. § 3730(e)(3), applies even when the Government is no longer an active participant in an ongoing qui tam lawsuit.

The FCA does not allow all relators to bring false claim suits. The statute contains a number of provisions which prohibit certain relators from bringing suit under the Act, one of which is known as the “government-action bar.”  The government-action bar prohibits a relator from bringing a qui tam suit based upon allegations or transactions which are the subject of a civil suit in which the government is already a party.

In the Ninth Circuit’s opinion issued on Dec. 1, the panel addressed the issue of whether the government-action bar applies when the government is no longer a party in the original qui tam civil suit.  As background, a previous relator raised a similar complaint about a medical device supplier’s supposed use of bribes and kick-backs, its use of unnecessary and unapproved medical devices, and supposed “sham clinical studies.”  The government intervened in that case; and the government, relator, and medical device supplier subsequently settled the case concerning certain conduct alleged in the qui tam complaint.  The case was dismissed with prejudice as to the conduct covered by the settlement and without prejudice as to any other conduct.

Separately, a second relator filed a qui tam complaint which substantially mirrored the prior qui tam complaint.  The government did not intervene, and the district court dismissed the case pursuant to the government-action bar.  The second relator appealed, claiming that he was entitled to be heard on claims other than the ones covered by the settlement.  The second relator’s argument focused on the fact that the government-action bar provision is “written in the present tense.”  He argued that the provision’s tense shows that the bar does not prohibit a subsequent suit if the original matter is not presently pending, and therefore, the Government is no longer party to it.

The Ninth Circuit disagreed with the relator’s argument.  The panel found that this case “hinge[d] not on the definition of the word ‘is,’ but rather on the definition of the phrase, ‘is already a party.’”  It wrote that a “person remains a party to his suit, even after the suit’s conclusion,” and that statutory context provides that once the Government becomes a party to an action, it remains a party “regardless of the action’s conclusion.”  The panel also held that the government-action bar covered claims not settled by the government in the prior suit that were ultimately dismissed without prejudice.

The case is United States ex rel. Bennett v. Biotronik.