United States ex rel. Estate of Gadbois v. Pharmerica Corp.
292 F. Supp. 3d 570
D.R.I.2017Background
- Relator Robert Gadbois (later substituted by his Estate) filed a qui tam FCA suit against PharMerica alleging overbilling Medicare/Medicaid for controlled and non-controlled drugs; original action was dismissed under the first-to-file bar in 2014.
- Jennifer Denk had earlier filed a sealed Wisconsin qui tam alleging substantially the same scheme; the United States intervened in Denk's case and later settled that action.
- The First Circuit vacated the dismissal and remanded, allowing supplementation under Rule 15(d) rather than requiring refiling (United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015)).
- The Estate sought leave in 2016 to file a supplemental complaint adding that the Wisconsin suit settled (and thereby curing the prior jurisdictional bar); PharMerica opposed, arguing supplementation would be futile.
- The district court held that the proposed supplemental complaint could not "relate back" to the original filing date and that, because the Government was a party to the Wisconsin action when the Estate sought to supplement, the government-action bar (31 U.S.C. § 3730(e)(3)) barred the Estate's claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the proposed Rule 15(d) supplemental complaint may "relate back" to the original complaint date | Estate: supplementation cures the jurisdictional defect without needing relation back doctrine; thus claims should take original filing date | PharMerica: allowing relation back would permit gamesmanship and unfairly preserve priority; supplemental pleading should be effective only when filed | Court: supplemental complaint cannot relate back; it is effective as of date leave was sought (Dec 27, 2016) |
| Whether the government-action bar (§ 3730(e)(3)) bars the Estate's suit | Estate: Government intervened only as to limited claims (Schedule II billed to Medicare), so § 3730(e)(3) doesn't bar the Estate's broader claims after the Wisconsin suit settled | PharMerica: Government intervention made it a party to the entire Wisconsin action (all allegations); thus the bar precludes the Estate's later suit | Court: Government was a party to the whole Wisconsin action; because supplementation is effective only as of Dec 27, 2016 and the Government had been a party, § 3730(e)(3) bars the Estate's claims |
| Whether supplementation would be futile (subject-matter jurisdiction) | Estate: supplementation appropriate and not futile given First Circuit remand | PharMerica: futility because no relation back and government-action bar applies | Court: supplementation would be futile; dismissed for lack of subject-matter jurisdiction |
| Whether the court should exercise supplemental jurisdiction over state-law claims if federal claims dismissed | Estate: sought to keep state claims | PharMerica: move to dismiss federal claims would moot supplemental jurisdiction | Court: declined to exercise supplemental jurisdiction over state-law claims |
Key Cases Cited
- United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015) (vacating dismissal and remanding to consider supplementation under Rule 15(d))
- Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015) (first-to-file/pending-case bar is temporal and dissolves when underlying suit is no longer pending)
- State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436 (2016) (discussing dismissal required by first-to-file bar)
- United States v. Russell, 241 F.2d 879 (1st Cir. 1957) (a supplemental pleading that enlarges original facts without new cause of action does not relate back)
- United States ex rel. Eisenstein v. City of N.Y., 556 U.S. 928 (2009) (holding United States is a party to an FCA action upon proper intervention)
- United States ex rel. Shea v. Cellco P'ship, 863 F.3d 923 (D.C. Cir. 2017) (discussing potential windfalls from allowing relation back of supplemental pleadings)
- United States ex rel. Carter v. Halliburton Co., 866 F.3d 199 (4th Cir. 2017) (addressing effects of first-to-file and related procedural issues)