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Supreme Court Declines to Resolve Burgeoning Split on First-to-File Rule in False Claims Act Cases

Posted: 07/17/2018
Services: White Collar and Government Enforcement
Industries: Government Contracts

Last month, the U.S. Supreme Court denied certiorari in a case concerning the “first-to-file” bar under the False Claims Act. The issue arose in a long-running case we previously covered in March 2014, August 2014, January 2015, and May 2015. The key question the Court declined to address was whether a relator must re-file a complaint after resolution of a prior action that would have barred the relator’s claim. Although the Court will not address the question in this case, the petition for certiorari suggests that the question may well return to the Court in another case before long.     


The FCA’s first-to-file bar states that “[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” The purpose of the bar is to prevent multiple suits arising from the same conduct. In United States ex rel. Carter v. Halliburton Co., relator Benjamin Carter alleged that a defense contractor, KBR, improperly billed the government for water-purification services in Iraq.   

Carter originally filed his suit in 2006, but a series of dismissals required him to re-file the complaint several times. He ultimately filed the complaint at issue in June 2011. By then, two other complaints had been filed by other relators based on the same alleged misconduct by KBR. Those other complaints were ultimately dismissed without reaching the merits of the claims, but at the time Carter re-filed his 2011 complaint, those other complaints were pending. The trial court dismissed Carter’s complaint with prejudice because of the first-to-file bar, but in March of 2013, the United States Court of Appeals for the Fourth Circuit reversed that ruling, holding that the FCA does not bar suits after a related action has been dismissed. In May 2015, the Supreme Court affirmed the Fourth Circuit’s decision, ruling that once a prior action has been dismissed, it “ceases to bar” later actions. Kellogg Brown & Root Servs. v. United States ex rel. Carter, 135 S. Ct. 1970, 1978 (2015).

The Supreme Court’s 2015 ruling remanded Carter’s case to the trial court without specifying whether he had to refile his complaint or his June 2011 complaint could proceed without refiling. This was critically important, because Carter’s claims would likely be barred by the statute of limitations if he had to refile. The trial court ruled that Carter had to refile his action because, even though the prior actions were dismissed, they were pending at the time Carter filed his June 2011 complaint.  Carter appealed that ruling to the Fourth Circuit, but in July 2017 the Fourth Circuit affirmed it.

Carter Appeals To The U.S. Supreme Court Again

In January 2018, Carter filed a petition for certiorari, arguing that the Fourth Circuit’s decision disregarded a concern the Supreme Court identified in its earlier holding in his case: that forcing relators to refile complaints could have detrimental consequences for them because actions frequently run to or over the statute of limitations due to the FCA’s mandatory sealing provisions and lengthy federal and state investigations, and “a first-filed suit would bar all subsequent related suits even if that earlier suit was dismissed for a reason having nothing to do with the merits.” Carter, 135 S. Ct. at 1979.

Carter also argued that the Fourth Circuit’s decision conflicted with the First Circuit’s 2015 decision on the same issue in United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015). In that case, the First Circuit allowed a later-filed action to proceed without refiling following the termination of an earlier action, because dismissal would be a “pointless formalit[y] . . . needlessly expos[ing] the relator to the vagaries of filing a new action.” Carter also argued that a pending appeal in the Second Circuit, United States ex rel. Wood v. Allergan, Inc., No. 17-cv-2191 (2d Cir. July 17, 2017), raised the same issues as his appeal and that the Supreme Court should rule in his case to provide guidance in light of the potential circuit split on the issue. The Second Circuit held oral argument in Wood on February 7, 2018.

Carter died after filing his petition for certiorari, but his counsel informed the Court that he had specifically instructed them to continue the action on behalf of his estate.

KBR filed a brief in opposition to certiorari and the Supreme Court also invited briefing by the Office of the Solicitor General. The government argued that the Supreme Court should deny certiorari because in a recent Supreme Court case, State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436 (2016), issued after the First Circuit ruling in Gadbois, the Court stated in dicta that the appropriate remedy for a violation of the first-to-file rule was dismissal, which would require Carter to refile his complaint. The government also pointed out that even if private relators were barred by the first-to-file rule, the government could still file an FCA suit, so fraudulent conduct would not necessarily go unpunished. Finally, the government noted the possibility that a circuit split could ripen, given that the Second Circuit’s Wood case was not yet decided, and therefore the Court could wait and reconsider the issue in light of Wood.


The denial of certiorari on Carter’s appeal is perhaps explainable by the immaturity of a developing circuit split. In the meantime, the Court’s decision brings to an end the long-running litigation Carter initiated, because his claims are now likely time-barred. But the Second Circuit’s ruling in Wood – and the suggestion of the Solicitor General – may return the issue to the Supreme Court’s docket again. Until the Supreme Court addresses the issue, however, plaintiffs and defendants in FCA cases will need to contend with the uncertain impact of the first-to-file bar.