202 F. Supp. 3d 198
D. Mass.2016Background
- Multiple qui tam actions were filed against Millennium Laboratories alleging medically unnecessary and excessive urine drug testing (UDT) and improper referral incentives; the government intervened in some and later settled with Millennium for $227 million covering misconduct from Jan 1, 2008 to May 20, 2015.
- The Settlement Agreement set aside 15% of recovery for relators but left allocation among relators to the Court if relators could not agree.
- Relator Mark McGuire filed a cross‑claim seeking declaratory judgment that he is entitled to the Relators’ Share; several other relators (including Cunningham’s estate) moved to dismiss that cross‑claim.
- Cunningham filed an earlier qui tam suit and provided the government with a detailed disclosure and supporting materials before McGuire filed; Cunningham’s case was later dismissed but remained on appeal and was considered "pending" at relevant times.
- Primary legal dispute: whether McGuire’s declaratory cross‑claim is barred by the FCA’s "first‑to‑file" rule because Cunningham was the earlier relator who had given the government notice of the alleged scheme.
- Court considered extra‑complaint disclosure materials submitted to the government (authenticated by affidavit) when resolving the factual jurisdictional challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McGuire’s declaratory cross‑claim is barred by the FCA "first‑to‑file" rule | McGuire: his cross‑claim is a declaratory action based on FCA and thus not barred; §1331 provides jurisdiction | Cunningham: his earlier complaint and disclosures gave the government sufficient notice; first‑to‑file bars related actions | Held: Dismissed — Cunningham’s prior disclosures/complaint gave sufficient notice; first‑to‑file bars McGuire’s claim |
| Whether the court may consider materials beyond the complaints in deciding first‑to‑file status | McGuire: court should limit comparison to complaints; extrinsic materials are improper | Cunningham: statute requires serving disclosure statements; court may consider disclosure materials given to government | Held: Court may consider extrinsic disclosure materials submitted to government (but excluded documents provided after McGuire’s filing) |
| Whether Cunningham’s motion to dismiss should be decided under a factual 12(b)(1) challenge or 12(b)(6) standard | Cunningham: factual challenge — proffers evidence showing McGuire was not first to file | McGuire: arguments better addressed under 12(b)(6); disputes rely on materials outside complaint | Held: Treated as factual 12(b)(1) challenge; considering extrinsic materials, McGuire not first to file; 12(b)(6) denial (insufficient on complaint alone) |
| Whether Cunningham’s disclosure appendix should be sealed as work product | Cunningham: Appendix is opinion work product and should be sealed to protect disclosures | McGuire: Cunningham put materials at issue and waived secrecy; public access presumption favors disclosure | Held: Motion to seal denied without prejudice — Cunningham failed to show good cause to overcome public access presumption |
Key Cases Cited
- United States ex rel. Ven‑A‑Care of the Florida Keys, Inc. v. Baxter Healthcare Corp., 772 F.3d 932 (1st Cir. 2014) (treats first‑to‑file rule as jurisdictional and explains government‑notice standard)
- United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13 (1st Cir. 2009) (court may consider extraneous materials on 12(b)(1) first‑to‑file inquiries but only those served before the second filing)
- United States ex rel. Heineman‑Guta v. Guidant Corp., 718 F.3d 28 (1st Cir. 2013) (first‑to‑file bars related actions when earlier suit gives government notice to investigate)
- United States ex rel. Wilson v. Bristol‑Myers Squibb, Inc., 750 F.3d 111 (1st Cir. 2014) (discussion of first‑to‑file preclusion where schemes are substantially similar)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (plaintiff bears burden to establish subject‑matter jurisdiction; distinction between factual and facial challenges)
- Valentin v. Hospital Bella Vista, 254 F.3d 358 (1st Cir. 2001) (court may consider extrinsic evidence when defendant makes a factual jurisdictional challenge)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6) motions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (established the pleading standard of plausibility for 12(b)(6))