Case , Document 57, 10/03/2017, , Page1 of 32 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT JOHN A.

Transcription

1 Case , Document 57, 10/03/2017, , Page1 of 32 No IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT JOHN A. WOOD, Plaintiff-Appellee, v. ALLERGAN, INC., Defendant-Appellant. On Appeal from the United States District Court for the Southern District of New York BRIEF FOR THE UNITED STATES AS AMICUS CURIAE IN SUPPORT OF DEFENDANT-APPELLANT CHAD A. READLER Acting Assistant Attorney General DOUGLAS N. LETTER MICHAEL S. RAAB CHARLES W. SCARBOROUGH SARAH CARROLL Attorneys, Appellate Staff Civil Division, Room 7511 U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, DC (202)

2 Case , Document 57, 10/03/2017, , Page2 of 32 TABLE OF CONTENTS Page INTRODUCTION AND INTEREST OF THE UNITED STATES... 1 STATEMENT OF ISSUES ADDRESSED... 2 STATEMENT OF THE CASE... 2 A. Statutory Background... 2 B. Procedural Background... 4 SUMMARY OF ARGUMENT... 7 ARGUMENT... 9 The False Claims Act s First-To-File Bar Requires Dismissal Without Prejudice Under The Circumstances Of This Case... 9 CONCLUSION CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE ADDENDUM

3 Case , Document 57, 10/03/2017, , Page3 of 32 TABLE OF AUTHORITIES Cases: Page(s) Brown v. Parkchester S. Condos., 287 F.3d 58 (2d Cir. 2002) Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280 (2010)... 3 Hallstrom v. Tillamook Cty., 493 U.S. 20 (1989)... 8, 12, 17 Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct (2015)... 3, 5, 8, 9, 10 McNeil v. United States, 508 U.S. 106 (1993)... 12, 13, 17 Menominee Indian Tribe of Wis. v. United States, 136 S. Ct. 750 (2016) Rockwell Int l Corp. v. United States, 549 U.S. 457 (2007) State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436 (2016)... 8, 10, 12, 13, 16 United States v. Baylor Univ. Med. Ctr., 469 F.3d 263 (2d Cir. 2006) United States ex rel. Carter v. Halliburton Co., 866 F.3d 199 (4th Cir. 2017)... 11, 13, 16 United States ex rel. Chovanec v. Apria Healthcare Grp., Inc., 606 F.3d 361 (7th Cir. 2010) , 11, 13, 16 United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015)... 14, 15

4 Case , Document 57, 10/03/2017, , Page4 of 32 United States ex rel. Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276 (10th Cir. 2004)... 11, 13 United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80 (2d Cir. 2017)... 6, 12, 14 United States ex rel. Heath v AT&T, Inc., 791 F.3d 112 (D.C. Cir. 2015) , 20 United States ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148 (2d Cir. 1993)... 1 United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227 (3d Cir. 1998) United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181 (9th Cir. 2001)... 11, 13, 20, 29 United States ex rel. Pentagen Techs. Int l, Ltd. v. CACI Int l, Inc., No , 1999 WL (2d Cir. Feb. 5, 1999) United States ex rel. Shea v. Cellco P ship, 863 F.3d 923 (D.C. Cir. 2017)...8, 11, 12, 13, 14, 15 United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111 (1st Cir. 2014)... 15, 22 Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000)... 1 Statutes: False Claims Act: 31 U.S.C et seq U.S.C. 3729(a)(1)(A)... 2, 3 31 U.S.C. 3729(a)(1)(B)... 2, 3 31 U.S.C U.S.C. 3730(a)... 2, 3 31 U.S.C. 3730(b) U.S.C. 3730(b)(1) U.S.C. 3730(b)(2)... 2 ii

5 Case , Document 57, 10/03/2017, , Page5 of U.S.C. 3730(b)(5)... 1, 3, 5, 8, 9, 10, 11, 12, 15, 16, 18, 19, 20, U.S.C. 3730(c)(3) U.S.C. 3730(d) U.S.C. 3730(e)(4) U.S.C. 3730(e)(4)(A) U.S.C. 3730(e)(4)(B) U.S.C U.S.C. 3731(b)... 4, 5 31 U.S.C. 3731(c)... 4, 9, U.S.C. 1320a-7b(b)... 4 Rule: Fed. R. App. P. 29(a)... 1 iii

6 Case , Document 57, 10/03/2017, , Page6 of 32 INTRODUCTION AND INTEREST OF THE UNITED STATES The False Claims Act (FCA), 31 U.S.C et seq., is the federal government s primary tool to combat fraud and recover losses due to fraud in federal programs. The FCA permits a private person, known as a relator, to enforce the statute by bringing a qui tam action in the name of the government. Id. 3730(b). The United States remains a real party in interest in such suits. United States ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1154 (2d Cir. 1993); see also Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 772 (2000). Accordingly, the United States has a substantial interest in the proper interpretation of the FCA. The United States filed statements of interest before the district court in this case. Although the statements of interest did not address the issues that are before this Court on interlocutory appeal, the government addressed those issues at an oral hearing, at the district court s request. The United States files this amicus brief pursuant to Federal Rule of Appellate Procedure 29(a) to clarify the government s position on one of the issues presently before the Court. It is the view of the United States that a qui tam action that violated 31 U.S.C. 3730(b)(5), known as the first-tofile bar, when initiated must be dismissed without prejudice, even if the earlier-filed suit is no longer pending when the district court resolves the motion to dismiss. The plain text of the statute compels that conclusion. The United States believes, however, that relators whose suits are dismissed and refiled under circumstances like

7 Case , Document 57, 10/03/2017, , Page7 of 32 those here might be entitled to equitable tolling in the event the statute of limitations had run on their claims in the interim. STATEMENT OF ISSUES ADDRESSED The United States submits this amicus brief to address the following issue: Whether a violation of the FCA s first-to-file rule requires that a qui tam suit be dismissed without prejudice, or whether a qui tam relator can instead cure such a violation by filing an amended complaint after the first-filed action has been dismissed. STATEMENT OF THE CASE A. Statutory Background The False Claims Act provides that any person who... knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval is liable to the United States for treble damages and civil penalties. 31 U.S.C. 3729(a)(1)(A). The statute also imposes liability if a person knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim. Id. 3729(a)(1)(B). The Attorney General can bring a civil action to remedy a violation of the FCA. See 31 U.S.C. 3730(a). Alternatively, a private person (known as a qui tam relator) may bring a civil suit for the person and for the United States Government. Id. 3730(b)(1). If a relator files a qui tam action, the government may intervene and take over the case. Id. 3730(b)(2). If the government declines to intervene, the 2

8 Case , Document 57, 10/03/2017, , Page8 of 32 relator conducts the litigation. Id. 3730(c)(3). The government and the relator divide the monetary proceeds from the qui tam suit. Id. 3730(d). Congress amended the FCA in 1986, adding provisions that sought to achieve 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. Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 294 (2010). The public disclosure bar is one such provision. See 31 U.S.C. 3730(e)(4). The first-to-file bar is another, specifying that, [w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action. Id. 3730(b)(5). The Supreme Court has clarified that a qui tam suit under the FCA ceases to be pending within the meaning of section 3730(b)(5) once it is dismissed. Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970, 1979 (2015). An earlier suit thus bars a later suit while the earlier suit remains undecided but ceases to bar that suit once it is dismissed. Id. at The FCA also includes statute-of-limitations provisions. An FCA suit may not be brought more than 6 years after the date on which the violation of section 3729 is committed or more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more 3

9 Case , Document 57, 10/03/2017, , Page9 of 32 than 10 years after the date on which the violation is committed, whichever occurs last. 31 U.S.C. 3731(b). Congress amended the FCA in 2009 to clarify that, if the government intervenes in a qui tam suit, the government s complaint relate[s] back to the filing date of the complaint of the person who originally brought the action, to the extent that the claim of the Government arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of that person. Id. 3731(c). B. Procedural Background This is a qui tam action in which the United States has not intervened. The relator alleges that defendant Allergan, Inc., violated the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b), by providing free drugs and other goods to physicians in exchange for their prescribing Allergan products to beneficiaries of Medicare, Medicaid, and other government programs. JA 28. The relator filed this suit in July 2010 and filed his most recent amended pleading in May Defendant moved to dismiss the case on a number of grounds. Among other things, defendant contended that dismissal was required under the FCA s first-to-file bar because a related qui tam action was already pending when the relator filed this suit. The government filed two written statements of interest regarding the validity of the relator s legal theories; those statements did not address the first-to-file bar. At the request of the district court, however, the government discussed the first-to-file 4

10 Case , Document 57, 10/03/2017, , Page10 of 32 bar at an oral hearing, taking the position that the provision did not require the district court to dismiss this suit. As relevant to the issues presently before this Court, the district court concluded that this case was related to an earlier-filed qui tam suit within the meaning of the first-to-file bar. See 31 U.S.C. 3730(b)(5) (precluding related action[s] based on the facts underlying [a] pending action ). Specifically, the court held this case to be related to United States ex rel. Lampkin v. Johnson & Johnson, Inc., No. 08-cv-5362 (D.N.J.), which was filed in October JA The government declined to intervene in Lampkin, and the Lampkin relator s claims against Allergan were dismissed in December 2012 for failure to serve. JA 35. (The rest of the case was dismissed in May Id.) The district court thus concluded that Lampkin was no longer pending under 31 U.S.C. 3730(b)(5) and that the first-to-file bar would pose[] no obstacle to Wood pursuing his claims today by filing a new lawsuit. JA 46; see also Carter, 135 S. Ct. at The relator argued that he should not be required to file a new lawsuit, however, contending that he had cured any violation of the first-to-file bar by amending his pleading after Lampkin was dismissed. See JA 46. Defendant responded that no amendment [could] change the fact that Wood initiated this action while at 1 The district court found it unnecessary to resolve whether this case was also related to a second qui tam suit, United States ex rel. Caryatid, LLC v. Allergan, Inc., No. 10-cv-46 (D.D.C.). See JA 43 n.18. The government takes no position as to whether this case is, in fact, related to Lampkin or Caryatid. 5

11 Case , Document 57, 10/03/2017, , Page11 of 32 least one related case was pending and that the court was thus required to dismiss this suit without prejudice to refiling. Id. The district court declined to dismiss the relator s suit, noting a division of authority on the issue. The court first determined that the first-to-file bar was not jurisdictional, see JA 48 the same conclusion that this Court reached in a different case shortly thereafter, see United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85 (2d Cir. 2017) (per curiam). The district court reasoned that the hornbook principle that jurisdiction... depends upon the state of things at the time of the action brought does not apply to non-jurisdictional rules. JA 50 (citation omitted); see also JA (citing cases permitting parties to amend pleadings to reflect their curing of various defects). The district court acknowledged that one could nonetheless read section 3730(b)(5) to require dismissal without prejudice here: the provision prohibits a person from bring[ing] an action based on the facts underlying an alreadypending case, and an amended pleading cannot change whether a relator brought his suit while a related qui tam action was pending. JA The district court reasoned, however, that even if the statutory text compelled a conclusion that the relator violated the first-to-file rule by filing this action when Lampkin was pending,... it does not necessarily follow that dismissal is now the required remedy for that violation. Id. The court believed that neither the plain language of Section 3730(b)(5) nor the Supreme Court s decision in Carter answers the procedural question 6

12 Case , Document 57, 10/03/2017, , Page12 of 32 of what [to] do when, as here, a relator unwittingly violated the first-to-file bar, but the bar no longer applies. JA 56. The court concluded that the FCA did not require dismissal without prejudice, which the court believed would effectively immunize Allergan from liability by time-barring the relator s claims. JA At oral argument and in its opinion, the district court suggested that the issues related to the first-to-file bar might warrant interlocutory appeal. See JA 57 n.17. Defendant then sought, and the district court authorized, an interlocutory appeal on two questions: (1) whether a violation of the FCA s first-to-file rule requires dismissal or can be cured through the filing of a new pleading after the earlier-filed action has been dismissed and (2) [i]f a violation of the first-to-file bar is curable, whether the FCA s limitations period is measured from the date of the relator s curative pleading (i.e., an amended complaint or a complaint filed in a new action) or the original complaint. JA , 197. This Court granted defendant s petition for leave to appeal. JA 199. SUMMARY OF ARGUMENT The FCA s first-to-file bar provides that, [w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a 2 The district court also concluded that the statute of limitations should be measured from July 2010, when the relator filed his original complaint, rather than May 2016, when he filed his currently operative pleading. See JA 63. Although that issue has been certified for interlocutory appeal, the government does not address it in this brief and takes no position on it. 7

13 Case , Document 57, 10/03/2017, , Page13 of 32 related action based on the facts underlying the pending action. 31 U.S.C. 3730(b)(5). The statute s prohibition on bring[ing] a related action when another qui tam suit is already pending directs courts to examine the circumstances that existed when the case at issue was first initiated. Although the provision ceases to bar the filing of new qui tam suits after a first-filed case has been dismissed, see Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970, 1979 (2015), suits initiated before dismissal of the first-filed case continue to violate the bar. In the view of the United States, a qui tam suit that violates the first-to-file bar must be dismissed without prejudice, even if the first-filed suit is no longer pending. The Supreme Court has described the first-to-file bar as requir[ing], in express terms, the dismissal of a relator s action where the bar has been violated. State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, (2016). This is consistent with [t]he general rule... that, if an action is barred by the terms of the statute, it must be dismissed rather than left on ice. United States ex rel. Shea v. Cellco P ship, 863 F.3d 923, 929 (D.C. Cir. 2017) (quoting Hallstrom v. Tillamook Cty., 493 U.S. 20, 31 (1989)). Contrary to the district court s conclusion, amendment of a relator s pleading cannot cure a first-to-file violation, as it cannot change the fact that the relator br[ought] his or her action while a related case was pending. 31 U.S.C. 3730(b)(5). The district court noted that the relator s claims might be time-barred if he were required to refile his suit and thus expressed concern that dismissal without 8

14 Case , Document 57, 10/03/2017, , Page14 of 32 prejudice could unjustly allow Allergan to escape liability. These concerns cannot overcome the statute s plain text, nor are they as significant as the district court believed them to be: a relator whose claims would otherwise be time-barred under circumstances like those here might well be entitled to equitable tolling if he refiled his suit. Moreover, even if the first-to-file bar would ordinarily preclude a qui tam suit, the United States could intervene in the suit, and the government s complaint would relate back to the date on which the relator filed his or her complaint. See 31 U.S.C. 3730(b)(5), 3731(c). ARGUMENT THE FALSE CLAIMS ACT S FIRST-TO-FILE BAR REQUIRES DISMISSAL WITHOUT PREJUDICE UNDER THE CIRCUMSTANCES OF THIS CASE In the view of the United States, a qui tam suit that was brought while an earlier-filed, related case was pending violates 31 U.S.C. 3730(b)(5), known as the first-to-file bar, even if the earlier-filed suit has since been dismissed. Although a relator is not barred from initiating a new suit after the first-filed suit is dismissed, see Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970, 1979 (2015), the plain language of the statute requires that courts dismiss without prejudice any related suits that were initiated before the first-filed action was terminated. The government recognizes that it took a different position in an oral hearing before the district court in this case. See JA 46. The position of the United States, however, is 9

15 Case , Document 57, 10/03/2017, , Page15 of 32 that dismissal without prejudice is required under circumstances like those presented here. 1. The first-to-file bar provides that, [w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action. 31 U.S.C. 3730(b)(5). The Supreme Court has recently stated that violations of this provision require, in express terms, the dismissal of a relator s action. State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, (2016). The Supreme Court s recent decision in Carter clarified, however, that the dismissal should be without prejudice: the first-to-file bar remains operative only so long as the first-filed action is pending, and a qui tam suit under the FCA ceases to be pending once it is dismissed. 135 S. Ct. at After the first-filed suit is dismissed, another relator can initiate a new qui tam suit making similar allegations, subject to principles of claim preclusion and other doctrines. Id. The Supreme Court s decision in Carter did not resolve the question presented here: how courts should proceed where a qui tam suit violated the first-to-file bar when initiated but the first-filed action is no longer pending. All but one court of appeals to address the issue, however, has concluded that such suits continue to violate the first-to-file bar, and those decisions are correct. Section 3730(b)(5) prohibits a relator from bring[ing] an action when a related case is pending, and [o]ne brings an action by commencing suit. United 10

16 Case , Document 57, 10/03/2017, , Page16 of 32 States ex rel. Chovanec v. Apria Healthcare Grp., Inc., 606 F.3d 361, 362 (7th Cir. 2010). Accordingly, courts must look at the facts as they existed when the claim was brought to determine whether an action is barred by the first-to-file bar. United States ex rel. Carter v. Halliburton Co., 866 F.3d 199, 204 (4th Cir. 2017) (Carter II ) (quotation marks omitted); see also United States ex rel. Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1279 (10th Cir. 2004) (holding that courts must look[] at the facts as they existed at the time when the relator s action was brought ); United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1188 (9th Cir. 2001) ( Following 3730(b)(5) s plain language, Lujan s action is barred if she brought the claim while [an earlier-filed suit] was pending. ). That a pending action is later dismissed, abandoned, or settled does not revive claims that were barred when they were filed. A qui tam suit that is initiated while a related action is pending is instead incurably flawed from the moment the relator file[s] it. United States ex rel. Shea v. Cellco P ship, 863 F.3d 923, 930 (D.C. Cir. 2017). As the Fourth Circuit explained on remand from the Supreme Court s decision in Carter, [f]acts that may arise after the commencement of a relator s action, such as the dismissals of earlier-filed, related actions pending at the time the relator brought his or her action, do not factor into whether a suit violates the first-to-file bar. Carter II, 866 F.3d at 207; see also Chovanec, 606 F.3d at ; Grynberg, 390 F.3d at 1279 n.2; Lujan, 243 F.3d at

17 Case , Document 57, 10/03/2017, , Page17 of 32 Indeed, this Court, in a nonprecedential opinion, affirmed the dismissal of a qui tam suit that, when filed, was based on the same facts underlying a suit that had since been dismissed. United States ex rel. Pentagen Techs. Int l, Ltd. v. CACI Int l, Inc., No , 1999 WL 55259, at *1 (2d Cir. Feb. 5, 1999). Although Pentagen assumed that the first-to-file bar was jurisdictional, an assumption that the Court has since rejected, see United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85 (2d Cir. 2017) (per curiam), the result remains correct. Because application of the first-to-file bar depends on the circumstances that exist when a qui tam suit is brought, the subsequent dismissal of a first-filed suit does not cure an initial violation. 2. If this suit violates the first-to-file bar, the next question is what the proper remedy is for that violation. In the view of the United States, a qui tam action that violates the first-to-file bar must be dismissed without prejudice to refiling. Although dismissal is not always required even where a litigant has violated a mandatory rule, the Supreme Court has described section 3730(b)(5) as requir[ing], in express terms, the dismissal of a relator s action when it is violated. Rigsby, 137 S. Ct. at That is because the statute prohibits the bring[ing] of an action when a related suit is already pending. 31 U.S.C. 3730(b)(5). As the D.C. Circuit recently explained under circumstances analogous to those here, [t]he general rule is that, if an action is barred by the terms of a statute, it must be dismissed rather than left on ice. Shea, 863 F.3d at 929 (quoting Hallstrom v. Tillamook Cty., 493 U.S. 20, 31 (1989)). When a statute specifies that an action shall not be instituted and the 12

18 Case , Document 57, 10/03/2017, , Page18 of 32 plaintiff fails to heed that clear statutory command, a district court properly dismisses the suit. Id. (quoting McNeil v. United States, 508 U.S. 106, 107, 113 (1993)). Because statutes like the first-to-file bar are understood to forbid the commencement of a suit, an action... brought while the condition precedent is unsatisfied must be dismissed. Chovanec, 606 F.3d at 362; see also Carter II, 866 F.3d at 209 ( [T]he only appropriate response for a first-to-file rule violation is dismissal. ). Dismissal without prejudice remains the required remedy even if the first-filed case is no longer pending when a district court acts on the later-filed suit. The statutory language provides no basis to treat some violations (those discovered before the first-filed action is dismissed) differently from others (those discovered after the first-filed action is dismissed). Several courts of appeals have thus affirmed the dismissal of suits even where, as here, a first-filed suit was no longer pending. See Carter II, 866 F.3d at 206; Shea, 863 F.3d at 928; Chovanec, 606 F.3d at 362; Grynberg, 390 F.3d at 1279 & n.2; Lujan, 243 F.3d at The D.C. Circuit also noted that a contrary holding requiring dismissal only if a first-to-file violation is discovered while the first-filed suit is pending would give rise to anomalous outcomes. Shea, 863 F.3d at 930. The court hypothesized a situation in which relators A, B, and C each file a qui tam action alleging the same fraud. Relator A reaches the courthouse first and his action therefore goes forward. Relator B reaches the courthouse second, but the district court determines his suit is blocked by the first-to-file bar and thus dismisses it per the ordinary course. See Rigsby, 137 S. Ct. at Relator C files last, and shortly thereafter, the first-filed action is dismissed. But suppose relator C filed her suit so late in the game that 13

19 Case , Document 57, 10/03/2017, , Page19 of 32 the district court fails to dismiss her action before dismissing the firstfiled suit. Under Shea s proposed rule, relator C would receive a windfall: she, unlike relator B, could simply amend her existing complaint and thereby secure herself pole position in the first-to-file queue. Relator C would jump past relator B for the opportunity to proceed with her suit (and to share in the government s reward). Id. Congress presumably did not intend the remedy for a first-to-file violation to depend on chance considerations such as the extent of a particular court s backlog and the timeliness of a particular court s entry of dismissal. Id. Requiring dismissal of all claims that violate the first-to-file bar is consistent with the statutory text and level[s] the playing field among relators. Id. 3. The district court reached a different conclusion in this case, reasoning that even if the statutory language compel[led] the conclusion that Wood violated the first-to-file rule by filing this action when Lampkin was pending,... it does not necessarily follow that dismissal is now the required remedy for that violation. JA The court instead concluded that a violation of the first-to-file bar can be cured by amending or supplementing the complaint after the first-filed action has been dismissed. JA The court took the view that the first-to-file bar is not jurisdictional, a position that this Court adopted shortly thereafter, see Hayes, 853 F.3d at 85, and noted that courts often let plaintiffs amend or supplement their complaints to cure their violations of non-jurisdictional requirements. The First Circuit reached a similar conclusion in United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 5-6 (1st Cir. 2015), reasoning that litigants can 14

20 Case , Document 57, 10/03/2017, , Page20 of 32 supplement their pleadings to cure even jurisdictional defects and holding that the intervening dismissal of a first-filed qui tam suit dissolve[s] the jurisdictional bar that the first-to-file rule otherwise would have imposed. 3 The First Circuit described circumstances like those here as analogous to the cases in which a jurisdictional prerequisite (such as an exhaustion requirement) is satisfied only after suit is commenced and concluded that dismissal without prejudice would be a pointless formality that would expose the relator to the vagaries of filing a new action. Id. at 6. The United States disagrees with these analyses. The plain text of the first-tofile bar prohibits relators from bring[ing] an action when a related suit is pending. 31 U.S.C. 3730(b)(5). As the D.C. Circuit explained in Shea, a relator cannot cure a violation of that provision by amending his or her complaint, as the filing of an amended complaint, while serving to modify the complaint, does not operate to end the action and begin a new one. 863 F.3d at 930. Amendment thus cannot alter when [the relator] brought his action i.e., at a time when a related suit was pending. Id. A relator can cure a first-to-file violation only by initiating a new suit. Id. Indeed, this case highlights the lack of connection between a first-to-file violation and the act of filing an amended pleading. The district court noted that the 3 The First Circuit, unlike this Court, views the first-to-file bar as jurisdictional. See United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014). 15

21 Case , Document 57, 10/03/2017, , Page21 of 32 amended pleading on which the relator relies here does not contain any factual allegations relating to dismissal of the earlier-filed actions, JA 56 n.16 it instead simply expanded [the relator s] allegations concerning the kickback scheme and dropped claims on behalf of Maryland and New Hampshire, JA The district court nonetheless accepted the relator s amended complaint, asserting that it would be a pointless exercise to require Wood to file an amended or supplemental complaint to cure the first-to-file violation. JA n But if neither dismissal nor amendment were necessary to cure a first-to-file violation, a qui tam suit that violated the first-to-file bar could simply be left on ice until the earlier-filed suit was dismissed. Chovanec, 606 F.3d at 362. Under that reading, section 3730(b)(5) would do nothing to block an infinite series of claims; me-too actions could proliferate, provided only that the copycat asked for a stay until the action ahead of it in the queue had been resolved. Id. That result would violate the statute, which the Supreme Court has read to require, in express terms, the dismissal of [the] relator s action. Rigsby, 137 S. Ct. at 443. It would also be inconsistent with Hallstrom, where the Supreme Court held that it would flatly contradict[] similar statutory language simply to stay a case until the condition 4 In Carter II, the Fourth Circuit rejected a claim that a similar proposed amendment, in which a relator simply add[ed] detail to [his] damages theories, could cure a first-to-file violation. 866 F.3d at 210. The Fourth Circuit did not, however, decide whether amendment could ever cure a first-to-file violation. See id. at 212 (Wynn, J., concurring). 16

22 Case , Document 57, 10/03/2017, , Page22 of 32 precedent was satisfied. 493 U.S. at 26; see also McNeil, 508 U.S. at 113 (holding that a district court properly dismissed a suit that violated a clear statutory command not to commence an action before exhausting administrative remedies). That conclusion holds regardless of whether the first-to-file bar is jurisdictional. See Hallstrom, 493 U.S. at 31 (finding it unnecessary to decide whether the statute at issue was jurisdictional in the strict sense ). 4. The district court believed dismissal of this case would undermine the purposes of the FCA because the relator s claims might be time-barred if he were required to refile his suit. In the view of the United States, those concerns cannot overcome the statutory text and may in any event be less significant than the district court believed they were. It may well be appropriate for courts to apply principles of equitable tolling when a relator must dismiss and refile his or her suit in circumstances like those here. Equitable tolling can be warranted where a party has acted diligently but some circumstance beyond [the party s] control has precluded timely filing. Menominee Indian Tribe of Wis. v. United States, 136 S. Ct. 750, 756 (2016). Equitable tolling principles have been applied where the plaintiff actively pursued judicial remedies but filed a defective pleading during the specified time period. Brown v. Parkchester S. Condos., 287 F.3d 58, 60 (2d Cir. 2002) (Sotomayor, J.) (quotation marks omitted). Although the district court observed that no party had suggested that equitable tolling 17

23 Case , Document 57, 10/03/2017, , Page23 of 32 should apply here, JA 46 n.11, the doctrine would be more logically invoked in the relator s subsequent, refiled suit. The district court also expressed concern that the public disclosure bar could preclude a refiled suit. The FCA generally requires a court to dismiss a qui tam action if substantially the same allegations or transactions... were publicly disclosed in certain forms, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. 31 U.S.C. 3730(e)(4)(A). But even if an intervening event, such as the unsealing of a first-filed suit, caused a public disclosure within the meaning of the FCA, a relator in Wood s position could qualify as an original source exempt from the bar. See id. 3730(e)(4)(B) (defining original source as an individual who either (i) prior to a public disclosure under subsection (e)(4)([a]), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or [(ii)]... has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and... has voluntarily provided the information to the Government before filing an action under this section ). Moreover, even if section 3730(b)(5) would ordinarily bar a second-filed suit, the United States could intervene in the second-filed suit before a court dismissed it. Section 3730(b)(5) prohibits any person other than the Government from interven[ing] or bring[ing] a related action based on the facts underlying the pending action. 31 U.S.C. 3730(b)(5) (emphasis added); see also Rockwell Int l Corp. v. United States,

24 Case , Document 57, 10/03/2017, , Page24 of 32 U.S. 457, 478 (2007) ( [A]n action originally brought by a private person, which the Attorney General has joined, becomes an action brought by the Attorney General once the private person has been determined to lack the jurisdictional prerequisites for suit. ). Under that circumstance, the government s complaint would relate back to the date on which the relator filed his or her complaint. See 31 U.S.C. 3731(c) (2009 FCA amendment clarifying that a government complaint in intervention relate[s] back to the filing date of the complaint of the person who originally brought the action, so long as the government s claim arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of that person ). 5 Fortuities related to the first-to-file bar thus would not necessarily allow a defendant to escape liability if the government intervened in the litigation. Finally, the government notes that a deficient first-filed complaint might not trigger application of the first-to-file bar. The first-to-file bar prohibits subsequent relators from bringing related action[s] based on the facts underlying the pending action. 31 U.S.C. 3730(b)(5). In determining whether actions are related, courts assess whether the later complaint alleges a fraudulent scheme the government already would be equipped to investigate based on [the first] [c]omplaint. United 5 This 2009 amendment superseded various judicial decisions, including this Court s decision in United States v. Baylor University Medical Center, 469 F.3d 263 (2d Cir. 2006). The government takes no position as to whether or how Baylor would affect a relation-back analysis in this case, where the government has not intervened. See Order, Wood v. Allergan, Inc., No (2d Cir. July 17, 2017) (directing the parties to brief that issue). 19

25 Case , Document 57, 10/03/2017, , Page25 of 32 States ex rel. Heath v AT&T, Inc., 791 F.3d 112, 121 (D.C. Cir. 2015) (quotation marks omitted; alterations in original); see also, e.g., Lujan, 243 F.3d at 1187 (assuming that a first-filed complaint will provide[] the government notice of the essential facts of an alleged fraud ). A court could reasonably determine that a detailed second-filed complaint was not related to a first-filed complaint that did not satisfy Federal Rule of Civil Procedure 9(b): the complaints might not be based on the same underlying facts, 31 U.S.C. 3730(b)(5), and the first complaint might not leave the government equipped to investigate the fraud alleged in the second complaint, Heath, 791 F.3d at Here, however, the district court concluded that this action was related to the earlier-filed Lampkin suit, see JA 42-45, and the government takes no position on the correctness of that holding. 6 In that circumstance, the first-filed complaint would be invalid, and only the second-filing relator, who provided the government with independently valuable information, would be entitled to a share of any recovery. Cf. United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 234 (3d Cir. 1998) (rejecting an interpretation of the FCA under which multiple relators would expect to recover for the same conduct). 20

26 Case , Document 57, 10/03/2017, , Page26 of 32 CONCLUSION The Court should hold that 31 U.S.C. 3730(b)(5) requires a court to dismiss without prejudice a qui tam suit that was filed when a related suit was already pending, even if the earlier-filed suit has since been dismissed. OCTOBER 2017 Respectfully submitted, CHAD A. READLER Acting Assistant Attorney General DOUGLAS N. LETTER MICHAEL S. RAAB CHARLES W. SCARBOROUGH s/ Sarah Carroll SARAH CARROLL Attorneys, Appellate Staff Civil Division, Room 7511 U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, DC (202) sarah.w.carroll@usdoj.gov 21

27 Case , Document 57, 10/03/2017, , Page27 of 32 CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with the requirements of Federal Rules of Appellate Procedure 29(a)(5) and 32(a). This brief contains 5429 words and was prepared in 14-point Garamond, a proportionally spaced font. s/ Sarah Carroll Sarah Carroll

28 Case , Document 57, 10/03/2017, , Page28 of 32 CERTIFICATE OF SERVICE I hereby certify that on October 3, 2017, I electronically filed the foregoing brief with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the appellate CM/ECF system. Participants in the case are registered CM/ECF users, and service will be accomplished by the appellate CM/ECF system. s/ Sarah Carroll Sarah Carroll

29 Case , Document 57, 10/03/2017, , Page29 of 32 ADDENDUM

30 Case , Document 57, 10/03/2017, , Page30 of 32 TABLE OF CONTENTS 31 U.S.C A1 31 U.S.C A2

31 Case , Document 57, 10/03/2017, , Page31 of U.S.C Civil actions for false claims (a) Responsibilities of the Attorney General. The Attorney General diligently shall investigate a violation under section If the Attorney General finds that a person has violated or is violating section 3729, the Attorney General may bring a civil action under this section against the person. (b) Actions by private persons. (1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting..... (5) When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action..... (e) Certain actions barred..... (4)(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, 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. (B) For purposes of this paragraph, original source means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the A1

32 Case , Document 57, 10/03/2017, , Page32 of 32 publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section U.S.C False claims procedure.... (b) A civil action under section 3730 may not be brought (1) more than 6 years after the date on which the violation of section 3729 is committed, or (2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last. (c) If the Government elects to intervene and proceed with an action brought under 3730(b), the Government may file its own complaint or amend the complaint of a person who has brought an action under section 3730(b) to clarify or add detail to the claims in which the Government is intervening and to add any additional claims with respect to which the Government contends it is entitled to relief. For statute of limitations purposes, any such Government pleading shall relate back to the filing date of the complaint of the person who originally brought the action, to the extent that the claim of the Government arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of that person..... A2