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Notes
1 31 U.S.C. § 3729(a)(1)(A) (prohibiting knowingly submitting false or fraudulent claims for payment from the federal government); id. § 3930(a) (permitting civil suits by the United States Attorney General); id. § 3930(b) (permitting civil suits by private individuals for themselves and on behalf of the federal government). The federal government may intervene in an action brought by a private party and take over control of the suit, but the private party remains a party to the suit. Id. § 3930(c).
2 Press Release, Dep’t of Justice, Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021 (Feb. 1, 2022), https://www.justice.gov/opa/pr/justice-department-s-false-claims-act-settlements-and-judgments-exceed-56-billion-fiscal-year.
3 Id.
4 See id. (The department’s health care fraud enforcement efforts restore funds to federal programs such as Medicare, Medicaid and TRICARE, the health care program for service members and their families.)
5 See United States ex rel. Van Raalte, et al. v. Healogics, Inc. et al., No. 6:14-CV-283-GJK (M.D. Fla., June 30, 2014); United States ex rel. Wilcox. v. Healogics, Inc., et al., No. 6:15-cv-1510 (M.D. Fla. Sept. 14, 2015).
6 See Press Release, Dep’t of Justice, Healogics Agrees to Pay Up to $22.51 Million to Settle False Claims Act Liability for Improper Billing of Hyperbaric Oxygen Therapy (June 20, 2018), https://www.justice.gov/opa/pr/healogics-agrees-pay-2251-million-settle-false-claims-act-liability-improper-billing.
7 See, e.g., United States ex rel. Duxbury v. Ortho Biotech Prod., L.P., 579 F.3d 13, 32 (1st Cir. 2009) (interpreting § 3730(b)(5) to bar a later allegation if it “states all the essential facts of a previously-filed claim or the same elements of a fraud described in an earlier suit”).
8 See, e.g., United States v. Morton, 467 U.S. 822, 828 (1984) (stating basic rule that “[s]ubject matter jurisdiction defines the court’s authority to hear a given type of case”).
9 Cf. U.S. ex rel. Beauchamp v. Academi Training Ctr., 816 F.3d 37, 40 (4th Cir. 2016) (overruling an earlier interpretation of the FCA’s public disclosure bar after Congress took out the language depriving courts of jurisdiction, because that made the bar “effectively, an affirmative defense”).
10 Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” F.R. Evid. 9(b).
11 See infra notes 51-52 and accompanying text
12 See 31 U.S.C. § 3729(a)(1)(A) (prohibiting knowingly submitting false or fraudulent claims for payment from the federal government); Winter ex. rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1119 (9th Cir. 2020) (concluding that a false certification of medical necessity can give rise to FCA liability).
13 See 31 U.S.C. § 3729.
14 Dep’t of Justice, The False Claims Act: A Primer 1, https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf.
15 See United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 267 (5th Cir. 2010) (finding that the FCA allows private plaintiffs to bring suit on behalf of the United States government).
16 See 31 U.S.C. § 3730(b)(2).
17 See id. § 3730(b)(4)(B).
18 See id. § 3730(d) (setting relator’s share at 15%-20% if government intervenes and 25%-30% if it does not).
19 See Mikes v. Straus, 274 F.3d 687, 696–97 (2d Cir. 2001) (internal quotation omitted), abrogated on other grounds by Universal Health Servs., Inc. v. United States, 579 U.S. 176 (2016).
20 U.S. ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1174 (9th Cir. 2006).
21 See Universal Health Servs., Inc. v. United States, 579 U.S. at 181 (noting that a “claim” under the FCA “includes direct requests to the Government for payment as well as reimbursement requests made to the recipients of federal funds under federal benefits programs”). The Medicare Act provides that “no payment may be made … for any expenses incurred for items or services … [that] are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member[.]” 42 U.S.C. § 1395y(a)(1)(A). Medicare reimburses providers for inpatient hospitalization only if “a physician certifies that such services are required to be given on an inpatient basis for such individual’s medical treatment, or that inpatient diagnostic study is medically required and such services are necessary for such purpose.” Id. § 1395f(a)(3).
22 See United States ex rel. Springfield Terminal R. Co. v. Quinn, 14 F.3d 645, 649 (D.C.C. 1994) (describing the FCA as designed to find “the golden mean between adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own”).
23 31 U.S.C. § 3730(b)(5). Another tool employed by the FCA to strike this golden mean is the “public disclosure bar,” which directs courts to dismiss an FCA action if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—
(i)in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii)in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii)from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
Id. § 3730(e)(4)(A).
24 See United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 267 (5th Cir. 2010).
25 U.S. ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1187 (9th Cir. 2001) (concluding “an exception-free, first-to-file bar conforms with the dual purposes of the 1986 amendments: to promote incentives for whistle-blowing insiders and prevent opportunistic successive plaintiffs”).
26 Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009).
27 31 U.S.C. 3730(b)(4) (1982) (amended 1986).
28 See, e.g., United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 460 (5th Cir. 1977) (finding the relator had “standing to bring the action so long as he predicates his claim on information not in the possession of the United States at the time of his suit”).
29 31 U.S.C. § 3730(e)(4)(A) (known as the “public disclosure” bar). This rule was itself amended in 2010 to remove references to the court not having “jurisdiction” over claims that fell under this bar to only directing courts to dismiss such claims. See United States ex rel. Reed v. KeyPoint Gov’t Sols., 923 F.3d 729, 738 n. 1 (10th Cir. 2019) (itemizing statutory changes).
30 Kellogg Brown & Root Services, Inc., v. United States ex rel. Carter, 575 U.S. 650, 662 (2015) (interpreting “pending” in § 3730(b)(5) according to its ordinary meaning as something remaining to be decided).
31 See 31 U.S.C. § 3730(b)(2) (setting out requirement that suits be filed under seal for 60 days).
32 See Scott Glass, Is the False Claims Act's First-to-File Rule Jurisdictional?, 118 Colum. L. Rev. 2361, 2371-72 (2018) (discussing what it means if the first-to-file rule is one of subject matter jurisdiction); see also Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006) (stating general rule regarding subject matter jurisdiction).
33 See Moran v. U.S. Capitol Police Bd., 820 F. Supp. 2d 48, 53 (D.D.C. 2011) (noting federal courts presume “a cause lies outside of [their] limited jurisdiction”).
34 See U.S. ex rel. Beauchamp v. Academi Training Ctr., 816 F.3d 37, 40 (4th Cir. 2016) (overruling an earlier interpretation of the FCA’s public disclosure bar after Congress took out the language depriving courts of jurisdiction, because that made the bar “effectively, an affirmative defense”); see also Total Benefits Plan. Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (stating that on a motion to dismiss, “[t]he moving party has the burden of proving that no claim exists”).
35 See Glass, supra note 32, at 2373 (internal quotation omitted).
36 See United States ex rel. Carson v. Manor Care, Inc., 851 F.3d 293, 303 (4th Cir. 2017) (reasoning that “[i]f a court finds that the particular action before it is barred by the first-to-file rule, the court lacks subject matter jurisdiction over the later-filed matter”); United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009) (reasoning that “as long as the later-filed complaint alleges the same material or essential elements of fraud described in a pending qui tam action, § 3730(b)(5)’s jurisdictional bar applies”); United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 516 (6th Cir. 2009) (concluding in order to preclude later-filed qui tam actions, the allegedly first-filed qui tam complaint must not itself be jurisdictionally or otherwise barred); Lujan, 243 F.3d at 1183 (dismissing plaintiff’s claim under the first-to-file rule “for lack of subject matter jurisdiction under § 3730(b)(5)”); Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004) (characterizing the first-to-file bar as “a jurisdictional limit on the courts’ power to hear certain duplicative qui tam suits”).
37 See U.S. ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 120-21 (D.C. Cir. 2015) (the first-to-file rule bears only on whether a qui tam plaintiff has properly stated a claim); United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85 (2d Cir. 2017) (same); see also In re Plavix Mktg., Sales Practices and Products Liab. Litig. (No. II), 974 F.3d 228, 233 (3d Cir. 2020) (concluding the first-to-file bar is not jurisdictional).
38 See United States v. Millennium Laboratories, Inc., 923 F.3d 240, 248 (1st Cir. 2019).
39 546 U.S. 500 (2006).
40 Id. at 515.
41 Id.
42 31 U.S.C. § 3730(e)(1).
43 Kucana v. Holder, 558 U.S. 233, 249 (2010).
44 See Heath, 791 F.3d at 120 (D.C. Cir. 2015); see also Millennium Laboratories, Inc., 923 F.3d at 250 (citing Heath). Similarly, the Second and Third Circuits have reasoned that if Congress wanted the first-to-file rule to reach more broadly, it would have stated so, especially where nearby provisions of 31 U.S.C. § 3730(b)(5) explicitly mention jurisdiction. See In re Plavix Mktg., 974 F.3d at 234; Hayes, 853 F.3d at 86.
45 See Arbaugh, 546 U.S. at 515.
46 See, e.g., United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009) (characterizing § 3730(b)(5) as a “jurisdictional bar”); U.S. ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1183 (9th Cir. 2001) (dismissing plaintiff's claim under the first to file rule “for lack of subject matter jurisdiction under § 3730(b)(5)”); Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004) (characterizing the first to file bar as “a jurisdictional limit on the courts' power to hear certain duplicative qui tam suits”); see also supra notes 23, 29 (discussing amendment to public disclosure bar).
47 See Arbaugh, 546 U.S. at 515.
48 See Glass, supra note 32, at 2387-89 (discussing arguments supporting finding the first-to-file rule nonjurisdictional).
49 F.R. Evid. 9(b).
50 See Universal Health Servs., Inc., 579 U.S. at 195 n. 6.
51 Walburn v. Lockheed Martin Corp., 431 F.3d 966, 973 (6th Cir. 2005).
52 Id.
53 See United States ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1210 (D.C. Cir. 2011) (declining to apply Rule 9(b) heightened pleading standards to FCA claims).
54 Id.
55 See id.
56 31 U.S.C. § 3729(a)(1)(B); see also Universal Health Servs., Inc., 579 U.S. at 195 n. 6 (2016).
57 See Universal Health Servs., Inc., 579 at 195 (observing that “the term ‘fraudulent’ is a paradigmatic example of a statutory term that incorporates the common-law meaning of fraud,” citing Neder v. United States, 527 U.S. 1, 22 (1999) for proposition that “the term ‘actionable fraud”’ is one with ‘a well-settled meaning at common law’”).
58 See generally Karin Lee, Linking Rule 9(b) Pleading and the First-to-File Rule to Advance the Goals of the False Claims Act, 108 Nw. U. L. Rev. 1423 (2014) (discussing the different circuit approaches to whether either the first-filed or later-filed complaints must be legally sufficient under Rule 9(b)).
59 Theoretically, a later filer could wait out the first filed action, but (1) they may not know about the first-filed action while it is under seal and (2) they could be usurped by another filer, who could again be someone with less than useful information.
60 The Solicitor General has argued against applying Rule 9(b) to require details of specific false claims because it would only serve to discourage potential relators from coming forward, which would not “meaningfully assist” the government’s enforcement efforts. See Brief for the United States as Amicus Curiae, L.P. v. United States ex rel. Duxbury, No. 09-654, 2010 WL 2007742 at *16-17 (May 19, 2010); see also Lee, supra note 58, at 1435 (discussing Solicitor General’s views). But that case did not involve the question of whether a later filed action by a plaintiff who could meaningfully assist the government should be barred by a filing that did not meet that standard.
61 Lee, supra note 58, at 1427 (suggesting that “[b]y requiring a claim to satisfy a permissive 9(b) standard before it can be used to bar later claims, courts will be able to proportionally calibrate the relative advantages of defendants and whistleblowers in the FCA context”).
62 31 U.S.C. § 3730(b)(5).
63 See United States ex rel. Duxbury v. Ortho Biotech Prod., L.P., 579 F.3d 13, 32 (1st Cir. 2009) (noting that “[a]ll courts that have addressed the issue have interpreted § 3730(b)(5) to bar a later allegation [if it] states all the essential facts of a previously-filed claim or the same elements of a fraud described in an earlier suit” (internal quotations omitted)).
64 See, e.g., United States ex rel. Poteet, 552 F.3d at 516 (finding later allegation alleged same essential facts about a scheme to provide monetary and other compensation to doctors to induce them to use the defendant’s surgical products).
65 United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 234 (3d Cir. 1998).
66 Id.
67 Id.
68 Grynberg, 390 F.3d at 1279.
69 Id.
70 Id.
71 Id.
72 United States ex rel. Heath v. AT & T, Inc. 791 F.3d 112, 121 (D.C. Cir. 2015).
73 Id. at 122.
74 Id.
75 31 U.S.C. § 3729(1)(A).
76 See generally United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 742 (10th Cir. 2018) (describing what the plaintiff must show to assert an FCA claim alleging false certification of “reasonable and necessary” services).
77 U.S. ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004).
78 Id. at 377.
79 United States v. AseraCare, Inc., 938 F.3d 1278, 1297 (11th Cir. 2019).
80 Id.
81 United States v. AseraCare Inc., 176 F. Supp. 3d 1282, 1285 (N.D. Ala. 2016), vacated and remanded on other grounds sub nom. United States v. AseraCare, Inc., 938 F.3d 1278 (11th Cir. 2019).
82 Id.
83 Id. at 1299.
84 See id. at 1296.
85 Id. at 1297.
86 42 U.S.C. § 1395f(7)(A)(II).
87 CMS, Medicare Program; Home Health Prospective Payment System Rate Update for Calendar Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices, 75 Fed. Reg. at 70448 (November 17, 2010); see also AseraCare Inc., 938 F.3d at 1282 (referencing the “not an exact science” observation).
88 See Winter ex. rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1119 (9th Cir. 2020).
89 See United States ex rel. Druding v. Care, 952 F.3d 89, 100-01 (3d Cir. 2020) (rejecting requirement that plaintiffs show defendants made an objective falsehood); United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 742 (10th Cir. 2018) (concluding that “it is possible for a medical judgment to be ‘false or fraudulent’ as proscribed by the FCA”).
90 See Universal Health Servs., Inc., 579 U.S. at 187 (applying common law definition when no formal definition was given).
91 Id.
92 See Winter, 953 F.3d at 1117.
93 Druding, 952 F.3d at 95.
94 Id. (internal quotation omitted). The Tenth Circuit noted that the Medicare Program Integrity Manual sets out criteria by which the question of whether services were reasonable and necessary can be evaluated:
Safe and effective;
Not experimental or investigational …; and
Appropriate, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is:
Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the *743 patient’s condition or to improve the function of a malformed body member;
Furnished in a setting appropriate to the patient’s medical needs and condition;
Ordered and furnished by qualified personnel;
One that meets, but does not exceed, the patient’s medical need; and
At least as beneficial as an existing and available medically appropriate alternative.
Polukoff, 895 F.3d at 743 (quoting CMS, Medicare Program Integrity Manual § 13.5.1 and cross-referencing § 13.3 as “incorporating § 13.5.1’s definition of reasonable and necessary for individual claim determinations”).
95 The Supreme Court has explained that “[i]nstead of adopting a circumscribed view of what it means for a claim to be false or fraudulent, concerns about fair notice and open-ended liability can be effectively addressed through strict enforcement of the [FCA]’s materiality and scienter requirements. Those requirements are rigorous.” Universal Health Servs., 579 U.S. at 192 (internal quotation omitted); see also Polukoff, 895 F.3d at 743 (citing Universal Health Servs.).
96 Ashcroft v. Iqbal, 556 U.S. 662, 664 (2008) (“When there are wellpleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.”)
97 See Polukoff, 895 F.3d at 743 (describing the FCA’s scienter requirement as “rigorous”).
98 CMS, 100-3 National Coverage Determination Hyperbaric Oxygen Therapy 20.29 (effective date April 3, 2017), available at https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?ncdid=12.
99 Enoch T. Huang, et al., A Clinical Practice Guideline for the Use of Hyperbaric Oxygen Therapy in the Treatment of Diabetic Foot Ulcers, 42:3 Undersea and Hyperbaric Medicine J. (2015), https://www.uhms.org/images/CPG/UHM_42-3__CPG_DFU_PROOF__4-27-2015.pdf.
100 For example, the fact pattern suggested that physicians altered patients’ medical records to upgrade a wound’s Wagner score after pressure from the clinic director to make them eligible for HBO therapy, despite the fact that the patients’ records lacked either a diagnosis of diabetes or specific characteristics of the wounds suggesting that HBO therapy would benefit them. Even courts applying the objective falsehood standard have suggested it can be met when “there evidence of alteration or falsification of any identified patient’s record.” Druding v. Care Alternatives, Inc., 346 F. Supp. 3d 669, 688 (D.N.J. 2018), rev’d and remanded sub nom. United States v. Care Alternatives, 952 F.3d 89 (3d Cir. 2020).
101 See Polukoff, 895 F.3d at 743 (concluding that plaintiffs can plausibly assert certification is false if the services do not meet the government’s definition of reasonable and necessary).
102 See id. (observing that the rigorous standards of materiality and scienter will limit doctors’ broad exposure to FCA liability).