Second Circuit holds that the “First to File Rule” Under the False Claims Act is not Jurisdictional

On April 4, 2017, a three-judge panel of the U.S. Court of Appeals for the Second Circuit issued a per curiam opinion holding that the “first to file rule” under the False Claims Act (“FCA”) is not jurisdictional, and instead bears on whether a qui tam plaintiff has properly stated a claim.

As background, the plaintiff filed a qui tam action under the FCA, alleging that he had personal knowledge that the defendant liability insurance companies failed to properly reimburse Medicare for certain payments made on behalf of Medicare beneficiaries. The district court dismissed the complaint with prejudice, finding that the plaintiff lacked any personal knowledge of the allegations and therefore acted in bad faith. While the district court did not address this argument, the defendants also alleged that there was already a pending case involving the same set of facts when the plaintiff filed his complaint.

Under the FCA’s, “first to file rule,” “[w]hen a person brings an action under [the FCA], no person other than the government may . . . bring a related action based on the facts underlying the pending action.” This rule prevents an individual from bringing an FCA qui tam action if another action invoking the same facts is already pending at the time the individual files suit. Here, the defendants argued that the pending case involving the same set of facts is a “related” case under the FCA.

The question presented in this case is whether the first to file rule is jurisdictional. Federal courts are required to verify that they have jurisdiction over the subject matter of a case before considering the merits. The Second Circuit joined the D.C. Circuit by holding that the first to file rule is not jurisdictional; the Fourth, Fifth, and Sixth Circuits have reached the opposite conclusion.

The Second Circuit reasoned that under Supreme Court precedent, courts are to “inquire whether Congress has ‘clearly stated’ that the rule is jurisdictional; absent such a clear statement . . . ‘courts should treat the restriction as nonjurisdictional in character.’” The relevant statutory provision of the FCA does not expressly indicate that the first to file rule is jurisdictional; it speaks only to who may bring a private action and when. In contrast, other provisions of the FCA do explicitly invoke the jurisdiction of the district courts. Accordingly, the Second Circuit concluded that in the absence of any clear directive from Congress, the first to file rule is not jurisdictional.

The case is United States, ex rel. Hayes v. Allstate Ins. Co.