United States Ex Rel. Shea v. Verizon Business Network Services Inc.
904 F. Supp. 2d 28
D.D.C.2012Background
- Relator Stephen M. Shea filed Verizon II on June 5, 2009, a second qui tam action under the FCA.
- A prior suit, Verizon I, was filed in 2007 and settled in February 2011 for $93.5 million with the United States, without admission of liability.
- SAC alleges Verizon billed the government for non-allowable surcharges based on Shea’s private-sector experience and internal Verizon documents from 2004.
- A former Verizon employee corroborated that Verizon lacked separate federal/commercial billing and could not turn off surcharges for federal customers.
- The United States declined to intervene in Verizon II; Defendants moved to dismiss for lack of subject matter jurisdiction under the FCA first-to-file bar.
- The court analyzed whether the first-to-file bar applies to successive related actions by the same relator and whether Verizon I and Verizon II are related actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the first-to-file bar apply to successive related actions by the same relator? | Shea argues the bar does not apply to the same relator filing a second action. | Verizon contends the bar applies to relate actions by the same relator. | Yes; the first-to-file bar applies to successive related actions by the same relator. |
| Was Verizon I pending when Verizon II was filed? | Verizon I was not pending at the time SAC was filed. | Verizon I remained pending when Verizon II commenced. | Verizon I was pending when Verizon II commenced (June 5, 2009). |
| Are Verizon I and Verizon II related actions under § 3730(b)(5)? | Verizon I and II are not related due to differing contracts/agencies. | They are related because they allege the same fraudulent scheme and would alert the government. | Yes; Verizon I and II are related actions. |
Key Cases Cited
- U.S. ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214 (D.C. Cir. 2003) (articulates first-to-file bar purposes and relatedness guidance)
- U.S. ex rel. Batiste v. SLM Corp., 659 F.3d 1204 (D.C. Cir. 2011) (defines relatedness and government notice standard under § 3730(b)(5))
- U.S. ex rel. Chovanec v. Apria Healthcare Group Inc., 606 F.3d 361 (7th Cir. 2010) (statutory interpretation of 'bring an action' and timing for jurisdiction)
- U.S. ex rel. Folliard v. CDW Tech. Services Inc., 722 F. Supp. 2d 37 (D.D.C. 2010) (material elements test for relatedness under first-to-file bar)
- CDW Corp. v. Synnex Corp., 798 F. Supp. 2d 66 (D.D.C. 2011) (authority on relatedness and government notice requirement)
- Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (Supreme Court 2004) (jurisdictional state-of-facts test at time action was brought)
- U.S. ex rel. Yale-New Haven Hospital, Inc. v. A-1 Home Health Care, Inc., 411 F. Supp. 2d 64 (D. Conn. 2005) (interpretation of 'bring an action' and related standards)