876 F.3d 1011
9th Cir.2017Background
- Brian Sant filed a qui tam FCA suit (Dec. 2009) alleging Biotronik paid unlawful benefits to physicians and ran sham clinical studies; the United States investigated and intervened in part, settling claims about meals and advisory-board payments and dismissing Sant with prejudice as to that "covered conduct" and without prejudice as to other claims (June 2014).
- Relator Nicholas Bennett filed a similar qui tam suit in Nevada (Mar. 2010), later transferred to Eastern District of California; the government did not intervene in Bennett’s first suit, which Bennett voluntarily dismissed (Apr. 2014).
- Bennett refiled a new qui tam complaint (Oct. 2014) alleging substantially the same conduct as Sant, but adding detail about sham clinical studies (claims the Sant settlement did not cover); the United States and California declined to intervene in Bennett II.
- Biotronik moved to dismiss on several grounds; the district court dismissed Bennett II based solely on the FCA government-action bar, 31 U.S.C. § 3730(e)(3), finding Bennett’s claims were “based upon allegations or transactions which are the subject of” Sant, in which the Government had been a party.
- Bennett argued § 3730(e)(3) applies only to currently pending suits and that the Government had intervened only as to certain claims, leaving others (sham studies) outside the bar; the district court rejected both arguments.
- The Ninth Circuit affirmed: it held the Government remains a “party” to an action after the action concludes and that partial intervention (or partial settlement) does not limit party status to only those claims the Government pursued or settled.
Issues
| Issue | Plaintiff's Argument (Bennett) | Defendant's Argument (Biotronik / Government) | Held |
|---|---|---|---|
| Whether § 3730(e)(3) government-action bar applies only to pending actions | "Is" in present tense limits the bar to suits where the Government currently is a party (i.e., pending actions) | "Is already a party" includes actions where the Government intervened even if concluded; party status persists | Held: government-action bar covers suits based on allegations/transactions that were the subject of prior actions in which the Government was a party, even if those actions concluded |
| Whether Government’s partial intervention/partial settlement limits § 3730(e)(3) to only the settled claims | Government intervened only as to some claims, so Bennett should be allowed to proceed on claims the Government did not settle | Intervention makes the Government a party to the entire action; statute and precedent do not permit slicing party status claim-by-claim | Held: Government intervention confers party status to the whole suit; partial settlement does not carve out non-settled claims from § 3730(e)(3) |
| Whether construing § 3730(e)(3) to reach concluded suits renders it redundant with public-disclosure bar § 3730(e)(4) | If applied to concluded suits, § 3730(e)(3) is merely a subset of § 3730(e)(4) and risks overbroad overlap | The statutes overlap partially but serve distinct functions; many government proceedings/disclosures are not public and thus not covered by § 3730(e)(4) | Held: Partial overlap is permissible; § 3730(e)(3) remains a distinct, operative bar |
| Whether claim-specific analysis is required to determine if Government is a party for § 3730(e)(3) | Must analyze claim-by-claim to see whether Government was a party to each claim Bennett asserts | Party status attaches to the case when Government intervenes; no claim-by-claim intervention recognized by statute or Eisenstein | Held: No claim-by-claim division; Government’s intervention makes it a party to the suit as a whole |
Key Cases Cited
- U.S. ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir. 1993) (describing qui tam as primary tool against federal fraud)
- Eisenstein v. City of New York, 556 U.S. 928 (2009) (Government becomes a party when it elects to intervene)
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007) (limitations on using original-source status to save unrelated claims)
- United States v. Carona, 660 F.3d 360 (9th Cir. 2011) (statutes may overlap; redundancy can be intentional)
- U.S. ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512 (9th Cir. 1995) (disclosures made in discovery but not filed are not public for public-disclosure bar)
- Gwaltney of Smithfield v. Chesapeake Bay Foundation, 484 U.S. 49 (1987) (present-tense statutory language may limit relief to ongoing violations)
- United States v. Forrester, 512 F.3d 500 (9th Cir. 2008) (district court statutory interpretation reviewed de novo)