The First Circuit has deepened a Circuit split on whether an earlier-filed qui tam action must meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) in order to serve as a jurisdictional bar to a later-filed suit under 31 U.S.C. § 3730(b)(5). Section 3730(b)(5) of the FCA states that “[w]hen a person brings [a qui tam action], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” This provision is known as the “first-to-file” rule. In U.S. ex rel. Heineman-Gupta v. Guidant Corp., No. 12-1867 (1st Cir. May 31, 2013), the First Circuit joined the D.C. Circuit in holding that the earlier-filed action need not satisfy Rule 9(b) in order to have preemptive effect. The Sixth and Ninth Circuits, on the other hand, have required the earlier-filed suit to be jurisdictionally viable and legally sufficient to trigger the first-to-file rule.

In Heineman-Gupta, the relator, Heidi Heineman-Gupta, alleged that Guidant Corporation and Boston Scientific Corporation (“BSC”) had engaged in a kickback scheme designed to promote sales and use of cardiac rhythm management devices. The relator’s allegations largely mirrored allegations that another relator, Elaine Bennett, had made in a separate qui tam action against BSC that she filed in another district at an earlier time. The Bennett qui tam action, which was pending (and under seal) when Heineman-Gupta filed her lawsuit, was ultimately voluntarily dismissed by Bennett and the government.

BSC moved to dismiss Heineman-Gupta’s later-filed suit as jurisdictionally barred by the first-to-file rule. Heineman-Gupta argued that Bennett’s earlier action could not have preemptive effect because it did not pass muster under Rule 9(b) in that did not include specific allegations regarding the particulars of the purported fraud, including dates, places and names of the physicians involved. The district court denied the motion, concluding that Rule 9(b) was inapplicable to the analysis, and the First Circuit affirmed.

The First Circuit stated that nothing in Section 3730(b)(5) references Rule 9(b); rather, the statute states simply that “an action is barred if it is a ‘related action’ that is ‘based on the facts underlying the pending action.’” Had Congress intended Rule 9(b) to be relevant to the analysis, the First Circuit stated, it could have referenced the Rule explicitly in Section 3730(b)(5), just as it references other Federal Rules of Civil Procedure in other provisions of the FCA, including Sections 3732(a), 3733(b)(1)(B), 3733(c)(2), 3733(h)(1), and 3733(j)(6)).

The First Circuit also observed that requiring the earlier-filed complaint to comport with Rule 9(b) would not serve any proper purpose. Rule 9(b) exists to protect defendants from frivolous allegations of fraud and to allow them to prepare a sufficient defense. The first-to-file rule, on the other hand, is focused on putting the Government on notice of potential fraudulent conduct. Quoting the D.C. Circuit’s decision in U.S. ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1210 (D.C. Cir. 2011), the First Circuit stated that Section 3730(b)(5) “?allow[s] recovery when a qui tam relator puts the government on notice of potential fraud,’ and ‘bar[s] copycat actions that provide no additional material information’ about the fraud.” According to the First Circuit, “[t]his means that if the first-filed complaint contains enough material information (the essential facts) about the potential fraud, the government has sufficient notice to launch its investigation. At that point, the purpose of the [prior, pending] qui tam action under § 3730(b)(5) is satisfied.”

As indicated above, the First Circuit’s decision in Heineman-Gupta joins the D.C. Circuit’s decision in Batiste in holding that Rule 9(b) is irrelevant to a first-to-file-rule analysis. The Sixth and Ninth Circuits have held to the contrary, finding that earlier-filed complaints that are jurisdictionally barred or legally insufficient cannot have preemptive effect under the first-to-file rule. See U.S. ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 516 (6th Cir. 2009) (earlier-filed suit subject to FCA public disclosure bar cannot have preemptive effect under the first-to-file rule); Campbell v. Redding Med. Ctr., 421 F.3d 817, 825 (9th Cir. 2009) (same); Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 (6th Cir. 2005) (earlier-filed complaint failing to meet Rule 9(b) pleading standards cannot have preemptive effect).