1st Circuit Victory for VSG Client

In a significant victory for Vogel, Slade, & Goldstein client Robert Gadbois, as well as qui tam plaintiffs in general, the First Circuit Court of Appeals ruled in United States ex rel. Gadbois v. Pharmerica Corporation, 2015 U.S. App. LEXIS 21841 (1st Cir. Dec. 16, 2015) that a qui tam plaintiff may utilize Federal Rule of Civil Procedure 15(d) to supplement an existing complaint with new factual allegations  in order to cure defects arising from the operation of the FCA’s “first-to-file” bar, 31 U.S.C. § 3730(b)(5).

The ruling came after the U.S. District Court for the District of Rhode Island had dismissed Mr. Gadbois’ claims on the basis of the “first-to-file” provision, because it concluded that another relator had filed an earlier case alleging similar facts in the Eastern District of Wisconsin. Mr. Gadbois appealed the District Court’s ruling, and while his appeal was pending, two significant events occurred.  First, the Supreme Court held in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015) that a qui tam case, once dismissed, no longer bars other later-filed qui tam actions under the first-to-file provision.  Id. at 1978. Second, the case in Wisconsin was settled and dismissed, meaning that, even if it was sufficiently similar to the Gadbois case for purposes of applying the “first-to-file” bar, under the authority of the Supreme Court’s Carter decision, the earlier-filed case could no longer bar the subsequently-filed lawsuit.

With the landscape shifted, Mr. Gadbois asked the First Circuit to remand the case so that, under Fed.R.Civ.P. 15(d), he may supplement his complaint to allege the dismissal of the earlier-filed case.  Rule 15(d) allows courts to provide plaintiffs with the opportunity to file supplemental complaints in order to plead facts that have occurred after the filing of the initial complaint.  The First Circuit agreed with Mr. Gadbois’ assertion that Rule 15(d) may be properly invoked by plaintiffs in order to plead supplemental facts that cure defects in an earlier pleading.

In reaching its decision, the Court cited its decision in ConnectU vs. Zuckerberg, 522 F.3d 82 (1st Cir. 2008), which held that, in a case involving federal question jurisdiction (as opposed to diversity jurisdiction), jurisdictional defects in a complaint may be cured through amendment. Gadbois, 2015 U.S. App. LEXIS 21841, at *8-9. The Court also cited the United States Supreme Court’s decision in Mathews v. Diaz, 426 U.S. 67 (1976), which held that plaintiffs may cure jurisdictional flaws by utilizing a supplemental complaint to allege facts that occurred after the initial filing of the complaint. Id. at *7-8.

This holding furthers important public policies that underlie the False Claims Act. For one thing, when a qui tam case overlaps with an earlier-filed action, it is often the case that several years will pass before the earlier case is dismissed, by which time the statute of limitations may have run on many claims asserted in the later-filed qui tam.  By holding that the second-in-time relator in such circumstances may supplement a prior complaint in lieu of filing a new lawsuit, the Gadbois decision preserves the relator’s ability to pursue these claims on behalf of the Government.  Furthermore, the Gadbois decision ensures that a second-in-time relator retains priority over relators who file later cases, thereby encouraging prompt reporting of fraud.

VSG attorneys Robert L. Vogel and Shelley R. Slade handled the appeal on behalf of Mr. Gadbois.