In United States ex rel. Gadbois v. PharMerica Corp., — F.3d —- (1st Cir. 2015), the First Circuit, in a matter of first impression, held that a relator’s complaint was not subject to dismissal under the first-to-file bar where an earlier-filed action based on the same underlying facts was settled and dismissed while the relator’s case was pending on appeal. Gadbois serves as a guidepost for other courts seeking to interpret the first-to-file doctrine subsequent to the Supreme Court’s decision in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, — U.S. —- (2015). We have previously discussed Kellogg Brown & Root here and here; in short, the Court held that the phrase “pending action” in 31 U.S.C. § 3730(b)(5) means that “an earlier suit bars a later suit while the earlier suit remains undecided but ceases to bar that suit once it is dismissed.”
In Gadbois, the relator alleged that PharMerica’s distribution of pharmaceuticals to long-term care facilities violated the FCA. PharMerica moved to dismiss under the first-to-file rule, which states that if an action is already pending involving the same subject matter that “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). In support, PharMerica highlighted similarities between the relator’s allegations and those in an earlier-filed case pending in the Eastern District of Wisconsin. The district court agreed with PharMerica and dismissed the relator’s complaint.
While the case was pending on appeal, the Supreme Court issued its opinion in Kellogg Brown & Root and the related action in the Eastern District of Wisconsin was settled and dismissed. In light of these two developments, the relator moved to supplement his complaint under Federal Rule of Civil Procedure 15(d), which allows a litigant to amend its pleadings to include any “occurrence, or event that happened after the date of the pleading to be supplemented.” In response, PharMerica argued that jurisdiction is determined at the time the original complaint is filed and because the relator’s original complaint was barred by the first-to-file bar, the court lacked subject matter jurisdiction.
The First Circuit rejected PharMerica’s argument, holding that in light of the Court’s ruling in Kellogg Brown & Root the case should be remanded to the district court for consideration of the relator’s motion to supplement. The first-to-file doctrine has seen significant developments over the past couple of years as the court of appeals are now divided on whether the first-to-file bar is jurisdictional. Compare United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112 (D.C. Cir. 2015) (first-to-file bar is not jurisdictional), with United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir.2014) (first-to-file bar is jurisdictional). With Gadbois applying Kellogg Brown & Root to hold that a first-to-file based dismissal is at times only temporary, it is likely that we are going to continue to see some important changes to this important area of FCA litigation.