United States ex rel. Heath v. AT & T, Inc.
416 U.S. App. D.C. 289
| D.C. Cir. | 2015Background
- Relator Todd Heath filed a nationwide qui tam False Claims Act (FCA) complaint (1997–2009) against AT&T and 19 subsidiaries, alleging a corporate-wide policy of failing to enforce the FCC’s "lowest corresponding price" (LCP) requirement for the E-Rate/Universal Service Fund, causing schools/libraries to seek reimbursement on inflated charges and AT&T to conceal overpayments.
- Heath previously filed a 2008 qui tam suit against Wisconsin Bell (an AT&T subsidiary) alleging affirmative misrepresentations by Wisconsin sales reps who denied existence of lower-rate state contracts; that case remained pending on appeal in the Seventh Circuit.
- AT&T moved to dismiss the nationwide complaint, arguing it was barred by the FCA first-to-file rule and insufficiently pleaded under Fed. R. Civ. P. 9(b); the district court dismissed under the first-to-file rule, treating it as jurisdictional.
- The D.C. Circuit reviewed de novo, held the first-to-file rule is nonjurisdictional, and compared the two complaints side-by-side to determine whether they alleged the same "material elements of fraud."
- The court concluded the Wisconsin Bell complaint described isolated subsidiary misconduct via affirmative misrepresentations, whereas the nationwide complaint alleged a distinct, institutionalized corporate failure to train/enforce LCP and subsequent concealment, so the first-to-file bar did not apply.
- The court also held Heath’s nationwide complaint satisfied Rule 9(b): it identified who (AT&T), what (institutionalized LCP noncompliance and concealment), where (multiple subsidiaries nationwide), when (1997–2009), and provided corroborating materials (training materials, a Detroit audit) and thus adequate particularity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the FCA first-to-file bar jurisdictional? | Heath: bar is a merits-based limitation, not jurisdictional. | AT&T: district court correctly treated it as jurisdictional to dismiss early. | Nonjurisdictional: first-to-file is a procedural merits limitation, not a jurisdictional constraint. |
| Does the Wisconsin Bell suit bar the nationwide suit under first-to-file? | Heath: Wisconsin Bell alleges isolated subsidiary fraud; nationwide complaint alleges distinct corporate policy and concealment. | AT&T: E-Rate is national; government would investigate other AT&T subsidiaries once aware, so suits are related. | Not barred: the two complaints allege materially different frauds (rogue subsidiary misrepresentations vs. institutionalized corporate noncompliance and concealment). |
| Did Heath plead fraud with particularity under Rule 9(b)? | Heath: complaint identifies who, what, where, when; includes training materials and a Detroit audit as indicia of reliability. | AT&T: complaint lacks affirmative government-facing misrepresentations, fails to identify specific actors and representative claim samples. | Pleading sufficient: implied certifications and corporate-level allegations plus corroborating documents meet Rule 9(b) in this context; representative claim samples are not categorically required. |
| May this Court affirm dismissal on alternative grounds (e.g., public-disclosure bar or Rule 9(b))? | Heath: Rule 9(b) and public-disclosure arguments do not defeat pleading; district court did not decide 9(b). | AT&T: preserve alternative bases for affirmance, including insufficient particularity. | Court addressed 9(b) and rejected AT&T’s alternative; public-disclosure bar not decided here. |
Key Cases Cited
- United States ex rel. Batiste v. SLM Corp., 659 F.3d 1204 (D.C. Cir. 2011) (compares complaints to decide first-to-file application)
- United States ex rel. Shea v. Cellco P'ship, 748 F.3d 338 (D.C. Cir. 2014) (prior D.C. Cir. treatment of first-to-file; discussed but not dispositive)
- United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214 (D.C. Cir. 2003) (first-to-file bars later suits that assert same material elements of fraud)
- United States v. Science Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010) (authority on implied certifications theory of FCA liability)
- United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009) (Rule 9(b) is context-specific; requires indicia of reliability that claims were submitted)
- United States ex rel. Chovanec v. Apria Healthcare Grp., Inc., 606 F.3d 361 (7th Cir. 2010) (distinguishes rogue-local frauds from national management-orchestrated schemes)