United States ex rel. Hayes v. Allstate Insurance Co.
853 F.3d 80
2d Cir.2017Background
- Relator J. Michael Hayes filed an FCA qui tam suit in October 2012 alleging that several (primarily liability) insurers systematically failed to reimburse Medicare under the Medicare Secondary Payer Act.
- Hayes claimed personal, nationwide, first-hand knowledge of each defendant’s participation in the scheme.
- The magistrate judge and district court found Hayes lacked that personal knowledge and acted in bad faith; the district court dismissed the complaint with prejudice as a Rule 11 sanction.
- Non‑Federal‑Express defendants argued below (and on appeal) that Hayes’ suit violated the FCA’s first‑to‑file rule because a related qui tam action, U.S. ex rel. Takemoto (filed July 2011), was pending when Hayes filed.
- The district court did not rule on the first‑to‑file argument; the Second Circuit addressed whether the first‑to‑file rule is jurisdictional before affirming dismissal on Rule 11 grounds in a separate summary order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FCA first‑to‑file rule is jurisdictional | Hayes implicitly contended the court had jurisdiction to decide the merits | Non‑FedEx defendants argued the pending Takemoto suit barred Hayes under §3730(b)(5), depriving the district court of subject‑matter jurisdiction | The first‑to‑file rule is non‑jurisdictional; it addresses the merits (whether a claim is barred), not subject‑matter jurisdiction |
| Whether the existence of Takemoto deprived the court of power to hear Hayes’ suit | Hayes argued the court could adjudicate his claim despite Takemoto | Defendants argued Takemoto’s prior filing precluded Hayes from bringing a related qui tam action | Court rejected the jurisdictional theory — Takemoto (if relevant) is a merits‑based bar under the first‑to‑file rule |
| Whether statutory text shows Congress intended the first‑to‑file rule to be jurisdictional | Hayes relied on absence of a jurisdictional defect | Defendants pointed to case law treating first‑to‑file as jurisdictional | Court applied Supreme Court tests (Arbaugh/Sebelius): because §3730(b)(5) does not speak in jurisdictional terms and FCA contains other explicit jurisdictional provisions, the first‑to‑file rule is non‑jurisdictional |
| Impact on appellate review and remedy | Hayes sought reversal of dismissal and leave to amend | Defendants urged affirmance on jurisdictional or sanction grounds | Because the first‑to‑file rule is non‑jurisdictional and the appellate court affirmed dismissal on Rule 11 grounds in a companion order, the judgment was affirmed |
Key Cases Cited
- Arnold v. Lucks, 392 F.3d 512 (2d Cir. 2004) (appellate courts must ensure lower courts had subject‑matter jurisdiction)
- U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) (discussing first‑to‑file rule as jurisdictional in that circuit)
- U.S. ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371 (5th Cir. 2009) (treating first‑to‑file as jurisdictional)
- U.S. ex rel. Heath v. AT&T, Inc., 791 F.3d 112 (D.C. Cir. 2015) (holding the FCA first‑to‑file rule is non‑jurisdictional)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (framework: Congress must clearly state when a rule is jurisdictional)
- Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145 (2013) (warning against loose use of "jurisdictional" and endorsing Arbaugh test)