Under the False Claims Act, once a whistleblower brings an action for fraud against the government, no other whistleblower may “bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). This language, known as the first-to-file rule, is designed to prevent copycat lawsuits that do not bring new allegations of fraud to the attention of the government.
For years, courts interpreting this rule have treated it as jurisdictional. In other words, if a court determines that a particular whistleblower was not “first to file” on his or her particular False Claims Act claims, then the court does not have the authority to consider the merits of the case and will dismiss it.
Recently, though, several federal appellate courts have bucked this trend and ruled that the first to file rule is not actually jurisdictional, and that it instead goes to the merits of the whistleblower’s case. The Court of Appeals for the D.C. Circuit reached that conclusion in 2015, in United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112 (D.C. Cir. 2015), and the Second Circuit reached that same conclusion just this month, in United States ex. rel. Hayes v. Allstate Insurance Company, 853 F.3d 80 (2d Cir. 2017). In its Hayes decision, the Second Circuit emphasized that limitations in federal statutes should not be read as “jurisdictional” unless that was clearly the intent of Congress, and that there is no evidence of such an intent in the first to file language in the False Claims Act.
It is too early to tell whether these two opinions are outliers or whether they mark the beginning of a new trend in how courts think about first-to-file in False Claims Act cases. Either way, this is an issue to watch, as whistleblowers generally fare better when there are fewer jurisdictional hurdles for them to clear in pursuing their claims in court.
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