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From Health Law Daily, December 17, 2015

FCA action dismissed under first-to-file bar may get another chance on remand

By Mary Damitio, J.D.

A pharmacist whose False Claims Act (FCA) (31 U.S.C. §3729 et seq.) qui tam action was dismissed based on the first-to-file bar will be allowed to file a motion to supplement his complaint before the trial court, despite the fact that his case was already pending on appeal when events occurred that removed the jurisdictional bar to his suit. The U.S. Court of Appeals for the First Circuit concluded that allowing the relator to file a motion to supplement his complaint before the trial court to include facts that occurred after the dismissal would avoid needless formalities. However, it is within the sole discretion of the trial court to allow such amendments, and therefore, the appeals court could only remand the case for consideration of the motion (U.S. ex rel. Gadbois v. PharMerica Corporation, December 16, 2015, Selya, B.).

Case dismissed. A pharmacist (relator) who formerly worked for PharMerica Corp. (PharMerica) brought a qui tam action against the corporation alleging violations of the FCA relating to its distribution of prescription drugs to long-term care facilities. PharMerica moved to dismiss, arguing that the court lacked subject matter jurisdiction because a similar case was already pending in Wisconsin (Wisconsin case) and the FCA’s first-to-file bar prohibits qui tam actions if there is previously pending litigation involving the same subject matter (31 U.S.C. §3730(b)(5)). The trial court agreed, concluding that the two actions were based on substantially the same facts and conduct, and dismissed the case due to lack of subject matter jurisdiction.

Post-dismissal events. After the relator’s case was dismissed, the U.S. Supreme Court in Kellogg Brown & Root Services, Inc. v. U.S. ex rel. Carter, 135 S. Ct. 1970 (2015) ruled that an early suit ceases to bar subsequent FCA suits after the earlier suit is dismissed. Subsequent to the Carter decision, the Wisconsin case that barred the relator’s suit was settled and dismissed. By that time, relator, who had already partially briefed his appeal, filed a motion to remand under Federal Rule of Civil Procedure 15(d), seeking to either have the appeals court supplement his complaint with additional facts or have the case remanded to allow for supplementation.

Complaint supplementation. The relator’s complaint was eligible for supplementing under Rule 15(d), which allows litigants a means to amend pleadings to account for later events. The court noted that the rule is intended to provide a court with broad discretion to allow supplemental pleadings to avoid needless complications with pleading amendments. The Supreme Court and other courts have interpreted the rule to allow amendments to correct subject matter jurisdiction deficiencies.

The Carter decision and the dismissal of the Wisconsin case removed the jurisdictional bar to the relator’s action. The court found that remanding the case was appropriate because it would be a “pointless formality” to allow the dismissal of the relator’s action stand, requiring him to file a new action. However, whether to allow the supplementation is a matter of the trial court’s discretion and will not automatically be granted on remand.

The case is No. 14-2164.

Attorneys: Dulce Donovan, United States Attorney's Office, for the United States of America. Paul E. Dwyer (Locke Lord Edwards LLP), David M. Glynn (K&L Gates LLP), and Nathaniel F. Hulme (Holland & Knight LLP) for Pharmerica Corp.

Companies: United States of America; PharMerica Corporation; CVS/Caremark Corporation; Walgreen Company; MedCall, LLC; Rite Aid

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