Wisconsin court agrees to transfer first-filed qui tam over defendant's objection

by Ben Vernia | February 2nd, 2012

On January 23, in U.S. ex rel. Paradies v. Aseracare, Inc., Eastern District of Wisconsin Judge J.P. Stadtmueller granted the relators’ motion to transfer their qui tam suit against a home health company to the Northern District of Alabama, where the Department of Justice had intervened in another suit against the company. The company argued that the transfer would be futile because of the False Claims Act’s first-to-file rule, and would not meet the requirements for a transfer under 28 USC 1404(a).

Judge Stadtmueller first rejected the company’s first-to-file argument, noting that the company’s opinion was that the relators’ case was the only one that should be permitted to proceed. In addition, he reasoned that under the Supreme Court’s analysis in Rockwell Int’l Corp. v. U.S., once DOJ intervened in the Alabama case, it became an action brought by the Attorney General, and so even if the Alabama relators were to be barred by the first-to-file rule, the government’s suit there would survive.

The court likewise rejected Aseracare’s argument that the proposed transfer failed to meet the requirements of the transfer statute. First, the case could have been brought in Alabama originally. Second, convenience supported the transfer: a preponderance of the witnesses were located closer to Alabama, and the relators and their attorneys were willing to travel there. Although the company’s attorneys were in Wisconsin, but “attorneys are often no strangers to travel,” he reasoned. But more important, he wrote, was the fact that two other FCA cases were pending in Alabama, including one in Georgia whose relators had also moved to transfer. The interests of justice likewise supported transfer, he found, because it would be more efficient to handle both (and potentially all three) cases in the same district and all were at an early stage of discovery. Moreover, the fact that the U.S. had intervened in the Alabama case, declined to intervene in the Wisconsin one, and did not oppose the transfer argued in its favor.

Lastly, Judge Statdmueller rejected Aseracare’s “only argument that carries weight concerning the interests of justice”: that it had been waiting for nearly four years for a resolution of the case. In fact, he noted, the case could have learned of the case only as early as August 2009, when the U.S. served a subpoena on it, and it was unsealed for the purposes of serving the company in November 2010.

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