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First-to-File Rule Barred FCA Action

The District Court for the District of Columbia dismissed a qui tam False Claims Act action for lack of jurisdiction because it was based on facts underlying an earlier action and was barred by the first-to-file rule of 31 USC 3730(b)(5). The relator alleged the contractor submitted false claims by falsely representing computer products and supplies offered for sale on NASA and GSA websites complied with the Trade Agreements Act. In an earlier qui tam action, another relator alleged the contractor falsely certified it would not sell noncompliant products through the GSA portal, but it did not allege the contractor misrepresented the products as TAA-compliant. The contractor argued the action was barred under 31 USC 3730(b)(5), which prohibits a person other than the government from bringing a related action based on the facts underlying an earlier-filed qui tam action. The parties disputed whether the two actions were distinguishable from U.S. ex rel. Hampton v. Columbia/HCA Healthcare Corp. (318 F3d 214), in which the Court of Appeals for the District of Columbia Circuit concluded section 3730(b)(5) bars "'actions alleging the same material elements of fraud' as an earlier suit, even if the allegations ... 'incorporate somewhat different details.'"

Golden Mean

The district court found that, when compared "at a sufficiently high level of generality," the difference between the two complaints was immaterial because the "material elements" of both relators' FCA claims were the same. Both relators alleged the contractor presented claims to the government related to the products listed through a procurement portal, the claims were false because the contractor failed to comply with the TAA, and the contractor knew the claims were false. It was not relevant that the two actions involved different contracts and agencies, because the FCA and underlying policy suggest the primary function of a qui tam complaint is to notify the investigating agency, which is the Department of Justice. In reviewing the earlier claims, the DOJ could have reviewed publicly available information to determine whether the contractor was a party to other contracts that required TAA compliance and was listing the products through portals associated with the contracts. To permit the relator's complaint to proceed would deviate from "'the golden mean' between offering 'adequate incentives for whistle-blowing insiders with genuinely valuable information' and discouraging' opportunistic plaintiffs who have no significant information to contribute of their own.'" (U.S. ex rel. Folliard v. CDW Technology Services, Inc., et al., DC DofC, 54 CCF 79,364)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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