Defendants moved to dismiss a qui tam suit. The suit alleged the same scheme as a prior FCA suit. The defendants argued the second suit was barred by the first-to-tile rule. But the court found the second suit added new defendants, which precluded application of the first-to-file rule.
United States ex rel. Goebel and Coleman v. Select Rehabilitation Inc. et al., E.D. Pa, 19-3277
- Multiple FCA Suits – Relators filed an action alleging defendants billed Medicare and Medicaid for services they didn’t provide. The suit was similar to another qui tam action against the defendants, which alleged fraud against at least one of the same defendants. The defendants moved to dismiss under the FCA’s first-to-file rule.
- First-to-File Rule – When a plaintiff brings an FCA suit, the FCA bars other plaintiffs from filing subsequent FCA suits. A subsequent suit is barred if it alleges the same essential facts as the prior action.
- Different Conspiracies – The court found the two suits alleged similar schemes. Nevertheless, the court found the second suit was not barred by the first-to-file rule. Both complaints alleged a hub and spoke conspiracy—that is, a conspiracy with a central defendant at the hub acting with several other defendants in the spokes. But this was a “rimless” conspiracy, meaning there was no agreement between the various spokes tying them together. Each conspiracy was thus distinct. The relators in this case had alleged different conspiracies (or spokes). Because these spokes were not related, the relators had asserted a claim distinct from the prior action.
- Prior Suit Didn’t Give Enough Information – FCA suits may be related where the first suit gives enough information to lead the government to other defendants in the later action. In this case, the court found the prior action only alleged fraud in one state. This would not have led the government to the defendants that participated in the fraud in different states.
—Case summary by Craig LaChance, Senior Editor
