United States ex rel. Shea v. Verizon Communications, Inc.
160 F. Supp. 3d 16
D.D.C.2015Background
- Relator Shea filed Verizon II (2009) alleging FCA fraud based on non-allowable surcharges on government contracts.
- Verizon moved to dismiss under the FCA first-to-file bar; court previously held related actions by the same relator barred.
- SAC alleges post-ACA conduct (post-March 23, 2010) and relies on insider/nonpublic information to link X (public disclosures) to Y (invoicing) of improper charges.
- Court analyzes public disclosure bar pre- and post-ACA amendments to determine whether claims were publicly disclosed.
- Court also reconsiders whether the first-to-file bar is jurisdictional and applies it to the initial filing date rather than amended pleadings.
- Case history culminates in dismissal of Shea’s action without prejudice for violation of the first-to-file bar; discovery motion denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Public disclosure bar applies to pre-ACA conduct? | Public disclosures do not bar claims pre-ACA. | Publicly disclosed elements render claims barred. | Pre-ACA bar governs pre-2010 conduct; amended bar applies post-2010. |
| First-to-file bar should apply to initial filing or amended complaint? | Bar cured by amendment; focus on amended complaint. | Bar triggers at initial filing of a related action. | Bar applies based on initial Verizon II filing; dismissal without prejudice required. |
| Whether the SAC pleads fraud with the particularity required by Rule 9(b)? | Amendment could cure pleading defects; nonpublic info supports claims. | SAC lacks specific misrepresentations and involved parties. | Dismissal without prejudice, not with prejudice, to allow cure upon refiling. |
| Rule 12(d) treatment for post-ACA public disclosure claims? | For post-ACA claims, not applicable here since dismissal without prejudice suffices. |
Key Cases Cited
- Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645 (D.C.Cir.1994) (golden mean between whistleblower incentives and opportunistic suits)
- Kellogg Brown & Root Servs., Inc. v. U.S., ex rel. Carter, 135 S. Ct. 1970 (2015) (qui tam dismissal does not require prejudice; pending status matters for bar)
- United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112 (D.C.Cir.2015) (first-to-file bar non-jurisdictional; bears on claim)
- U.S. ex rel. Oliver v. Philip Morris USA Inc., 763 F.3d 36 (D.C.Cir.2014) (ACA amendments not retroactive to pending suits)
- U.S. ex rel. Settlemire v. District of Columbia, 198 F.3d 913 (D.C.Cir.1999) (public disclosure sufficiency threshold for inference of fraud)
- Davis v. District of Columbia, 679 F.3d 832 (D.C.Cir.2012) (public disclosure bar under FCA)
- Lujan v. Hughes Aircraft Co., 162 F.3d 1027 (9th Cir.1998) (timing of conduct vs. disclosure for retroactivity)