30 F.4th 1035
11th Cir.2022Background
- H.I.G. Capital acquired Surgery Partners (operator of surgery and pain clinics) and helped form Logan Laboratories, which performed urine drug testing (UDT).
- Relators (Baker and Cho) allege Surgery Partners/Logan ran unnecessary, expensive quantitative UDT panels and billed Medicare; H.I.G. allegedly controlled and directed the scheme.
- A separate qui tam (Ashton) was filed in Aug. 2016 against Surgery Partners and Logan Labs (not H.I.G.); the Ashton action later settled and included releases tied to the conduct alleged.
- Relators filed their original FCA complaint in Apr. 2017 and amended it; the second amended complaint narrowed focus to H.I.G.; the government intervened in parts of the prior Ashton suit but declined to intervene as to H.I.G.
- The district court dismissed the Relators’ suit without prejudice under the FCA first-to-file bar, reasoning the Ashton action was pending when the Relators originally filed and the two suits were related; the Relators appealed.
- The Eleventh Circuit affirmed: the court held the filing date of the original complaint controls the first-to-file analysis and that the Relators’ claims share the same material elements as the Ashton Action, so the suit was barred; the court denied H.I.G.’s cross-appeal requesting dismissal with prejudice on alternative grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the first-to-file bar looks to the amended complaint or the original filing | Relators: amended complaint (filed after Ashton settled) should be the reference point so the bar no longer applies | H.I.G.: the relevant time is when the action was brought (original filing); first-to-file bars later suits filed while a related action is pending | Court: Looks to the moment the qui tam action was brought (original complaint); amended pleading cannot cure a first-to-file defect |
| Whether the Relators’ suit is "related" to the earlier Ashton Action | Relators: their claims (naming H.I.G., alleging investor-directed scheme and conspiracy) are materially different | H.I.G.: complaints allege the same essential UDT fraud and would equip the government to investigate affiliates/investors | Court: Adopted the "same material elements" test and held the complaints allege the same essential facts; action is related and barred |
| Whether naming H.I.G. (a new defendant) makes the later suit distinct | Relators: adding H.I.G. as a defendant alleges a different, investor-driven scheme | H.I.G.: adding a corporate affiliate does not change material elements where the same scheme is alleged | Court: Adding H.I.G. did not materially expand or change the alleged scheme; government was on notice from Ashton |
| Whether dismissal should be converted to dismissal with prejudice on alternative grounds (e.g., failure to state a claim, Rule 9(b)) | H.I.G.: court should dismiss with prejudice for failure to plead fraud/knowledge adequately | Relators: N/A (court did not reach these grounds below) | Court: Declined to convert dismissal; refused to grant additional relief on grounds not decided below |
Key Cases Cited
- Rockwell Int'l Corp. v. United States, 549 U.S. 457 (2007) (original and amended allegations relevant to jurisdictional/public-disclosure analysis)
- United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163 (2d Cir. 2018) (an amended complaint cannot cure a first-to-file defect)
- Harris v. Garner, 216 F.3d 970 (11th Cir. 2000) (definition of when an action is "brought")
- Makro Capital of Am., Inc. v. UBS AG, 543 F.3d 1254 (11th Cir. 2008) (distinguishing when original complaint was not a qui tam action)
- United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112 (D.C. Cir. 2015) (same material elements test and side-by-side complaint comparison)
- In re Nat. Gas Royalties Qui Tam Litig., 566 F.3d 956 (10th Cir. 2009) (explaining first-to-file purposes and test adoption)
- United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214 (D.C. Cir. 2003) (adding corporate subsidiaries does not necessarily change material elements)
- Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 575 U.S. 650 (2015) (defining when an action is no longer "pending")