First-filed qui tam need not satisfy Rule 9(b) to bar latter suit, First Circuit holds

by Ben Vernia | June 18th, 2013

On May 31, the Court of Appeals for the First Circuit, in U.S. ex rel. Heineman-Guta v. Guidant Corp., affirmed the dismissal of a relator’s declined qui tam case on the grounds that it was barred by a previous suit, even if that suit failed to allege fraud with particularity as required under Fed. R. Civ. P. 9(b).

The case was brought by a former account manager at Boston Scientific Corp. against her employer and its subsidiary, Guidant Corp., alleging kickbacks in the sale and promotion of its implantable cardiac devices. The whistleblower filed her case in 2009, while an earlier-filed case remained under seal. The Department of Justice declined to intervene in the first-filed case, and the relator in that matter dismissed it. The companies moved to dismiss the later-filed suit on first-to-file grounds, under 31 USC 3730(b)(5), and the district court granted the motion, over the whistleblower’s protest that the earlier case lacked particularity.

The First Circuit affirmed. It first analyzed the text of the FCA, and concluded that it would be inappropriate to graft a particularity requirement on the first-to-file rule, especially since Congress had specifically referenced other Federal Rules in other sections of the Act, and so the plain language of the provision made particularity unnecessary. In addition, the court reasoned, the two provisions had different purposes: the first-to-file bar was intended to protect the government from parasitic lawsuits, and Rule 9(b) was intended to protect defendants from meritless fraud allegations.

Applying the Circuit’s “essential facts” test in assessing first-to-file arguments, the court concluded that the earlier complaint barred the latter one. It rejected the whistleblower’s attempt to distinguish the complaints on the grounds of details, finding that the complaints need only overlap in material facts, and need not be identical for the bar to apply.

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