United States ex rel. Wood v. Allergan, Inc.

899 F.3d 163
CourtCourt of Appeals for the Second Circuit
DecidedAugust 9, 2018
DocketDocket No. 17-2191-cv; August Term 2017
StatusPublished
Cited by54 cases

This text of 899 F.3d 163 (United States ex rel. Wood v. Allergan, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163 (2d Cir. 2018).

Opinion

Chin, Circuit Judge:

In this qui tam action, the relator, plaintiff-appellee John A. Wood, contends that defendant-appellant Allergan, Inc. ("Allergan"), a pharmaceutical company, violated the False Claims Act (the "FCA"), 31 U.S.C. § 3729 et seq. , through a kickback scheme that caused the United States (the "Government"), state governments, and the District of Columbia to make overpayments *166of Medicare, Medicaid, and other benefits.

Wood, however, was not the first relator to sue Allergan under the FCA based on this alleged scheme. Consequently, the district court (Furman, J. ) found that Wood's complaint violated the FCA's "first-to-file bar," which prohibits a person from bringing a "related action" when an FCA suit is "pending." 31 U.S.C. § 3730(b)(5).

In this interlocutory appeal, the issue presented -- a question of first impression for this Court -- is whether a violation of the FCA's first-to-file bar can be cured by the filing of an amended or supplemented complaint after the first-filed related action is no longer pending. We hold that a violation of the first-to-file bar cannot be remedied by amending or supplementing the complaint. Accordingly, we reverse and remand with instructions for the district court to dismiss the Third Amended Complaint -- the operative complaint -- without prejudice.

BACKGROUND

1. Statutory Background

The FCA imposes significant penalties on any person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" to the Government or any person who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a)(1)(A)-(B).

Rather than rely solely on federal enforcement of these provisions, Congress decided to deputize private individuals, encouraging them to come forward with claims on behalf of the Government in the form of qui tam suits. Qui tam provisions are not new to federal law, appearing as early as the first Congress. J. Randy Beck, The False Claims Act and the English Eradication of Qui Tam Legislation , 78 N.C. L. REV. 539, 554 n.54 (2000). In fact, the FCA and its qui tam provisions emerged "midway through the Civil War, in response to frauds perpetrated in connection with Union military procurement." Id. at 555.

Under the FCA's qui tam provisions, "a private party, called the relator, challenges fraudulent claims against the [G]overnment on the [G]overnment's behalf, ultimately sharing in any recovery." United States ex rel. Shea v. Cellco P'ship , 863 F.3d 923, 926 (D.C. Cir. 2017) ; see 31 U.S.C. § 3730(b). The relator may be awarded up to thirty percent of the proceeds ultimately recovered. 31 U.S.C. § 3730(d). Relators need not allege personal injury but instead sue "to remedy an injury in fact suffered by the United States." Vt. Agency of Nat. Res. v. United States ex rel. Stevens , 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). The Government may intervene in any qui tam action, taking over from the relator, and, in that event, limiting the relator's share of the recovery to at most twenty-five percent. 31 U.S.C. § 3730(b)(2), (d)(1).

The FCA provides that a "copy of the complaint ... shall be served on the Government." Id. § 3730(b)(2). "The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information." Id. Moreover, the "Government may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal." Id. § 3730(b)(3). "Before the expiration of the 60-day period or any extensions," however, the Government shall "(A) proceed with the action, in which case the action shall be *167conducted by the Government; or (B) notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action." Id. § 3730(b)(4).

The FCA includes several other limiting provisions, in part a response to the possibility that the large profits available to qui tam relators created "the danger of parasitic exploitation of the public coffers." United Statesex rel. Springfield Terminal Ry. Co. v. Quinn , 14 F.3d 645, 649 (D.C. Cir. 1994).

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