The Intent of the First-to-File Rule.

• Author: Guy, Andrew
• Position: Government Contracting Insights

Two years ago, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Supreme Court interpreted the "first-to-file" bar of the False Claims Act in a manner that seemingly authorizes relators to pursue qui tam suits based upon the same allegations made in previously dismissed FCA actions.

On remand from the Supreme Court, the Fourth Circuit recently issued an opinion in Carter in which it took a similarly text-based approach, but reached a different conclusion, holding that the act's first-to-file bar should be interpreted in a manner that promotes finality and prevents copycat lawsuits. These opinions demonstrate the importance of carefully assessing the act's statutory text in litigation.

The first-to-file rule states that "[w]hen a person brings an action... no person other than the government may intervene or bring a related action based on the facts underlying the pending action." See, 31 U.S.C. [section] 3730(b)(5).

The Supreme Court's decision in Carter declined to examine Congress' statutory intent and instead looked to the dictionary definition of the term "pending" to hold that a later action is only barred as long as the first action remains undecided or is awaiting a decision.

Thus, the Supreme Court noted that "an earlier suit bars a later suit while the earlier suit remains undecided by ceases to bar that suit once it is dismissed." Under this interpretation, once the first action ends, a second relator theoretically can bring a suit based on the same facts--provided, of course, that the subsequent suit is filed within the statute of limitations.

The Supreme Court remanded Carter for further proceedings consistent with its decision, but the district court quickly realized that the case presented additional questions involving the first-to-file rule. The relator in Carter had not waited until the first action had ended to file his case: he instead brought the action while two other FCA actions were pending.

And if the court dismissed the relator's current lawsuit and the relator filed a new lawsuit, the new lawsuit would be barred by the statute of limitations. Recognizing the dilemma, the relator contended that he should be able to amend his complaint without having to re-file.

The district court rejected the relator's contention, and the Fourth Circuit recently affirmed in United States ex rel. Carter v. Halliburton Co. As the Fourth Circuit explained, the FCA "imposes a restriction on the 'bring[ing]' of...