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From Health Law Daily, December 18, 2018

Amended complaint does not revive qui tam complaint barred by first-to-file

By Rebecca Mayo, J.D.

A qui tam action that is barred by the first-to-file rule may not cure the deficiency by amending the complaint after the earlier-filed action is dismissed. A district court judge dismissed a relator’s qui tam action against Albertsons LLC after finding that that claim was brought after another qui tam action alleging the same material elements of fraud had been filed. The court held that even though the first claim was dismissed, the second action was still barred because it was brought while the first action was pending (US ex rel Zelickowski v. Albertsons LLC, December 17, 2018, Rodriguez, X.).

The claim. A former Albertsons pharmacist alleged that Albertsons began offering deeply discounted generic drugs through a pharmacy discount program. According to the pharmacist, these discounted prices established Albertsons’ usual and customary prices for these generic drugs, yet Albertsons continued to submit the non-discount price for government reimbursement. The pharmacist brought a qui tam action against Albertsons in November of 2015. The pharmacist was not aware that another Albertsons pharmacy employee had brought a qui tam action against Albertsons in March of 2015 because the case was still under seal. The other qui tam action was voluntarily dismissed in May 2017, and the pharmacist amended her complaint shortly thereafter. Albertsons filed a motion to dismiss arguing that the action was barred by the first-to-file rule.

First-to-file. When a person brings a qui tam action, no person other than the government may intervene or bring a related action based on the facts underlying the pending action. For the court to decide if the action is barred, it must determine whether an earlier-filed action was "pending" and whether the two actions are related. For the claims to be related, the claims must allege the same material or essential elements of fraud. The claims do not need to be identical, but merely related. The fact that one claim contains allegations in multiple states, does not sufficiently differentiate the underlying claims of fraud that remain the same. The court here found that both actions alleged the same material or essential elements of fraud and were thus related.

While it is clear that the other claim was filed before the pharmacist’s claim, the court looked to whether a relator whose action was barred at the time of filing (because of an earlier-filed action) can cure that defect by filing an amended complaint after the earlier-filed action is dismissed. The court noted that deficiencies in a complaint can often be cured by amendment, however an amended or supplemental pleading cannot change the fact that the relator brought an action while another related action was pending. A plaintiff can amend himself or herself out of jurisdiction by withdrawing allegations that appeared in the original complaint, but a plaintiff cannot establish jurisdiction by amendment when jurisdiction did not previously exist. Therefore, the court found that the pharmacist’s action was doomed at the time of filing because of the prior-filed action and it could not be cured by an amended complaint.

The case is No. SA-15-CV-957-XR.

Attorneys: Mary F. Kruger, U.S. Attorney’s Office, for the United States. Frederick Robinson (Reed Smith LLP) for Albertsons LLC.

Companies: Albertsons LLC

MainStory: TopStory CaseDecisions CMSNews FraudNews ProgramIntegrityNews QuiTamNews TexasNews

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