The U.S. Supreme Court has fixed an error that caused the premature death of qui tam cases in many jurisdictions: Whistleblowers now may bring new complaints under the False Claims Act as soon as a related — but earlier-filed — case has concluded.
This expert analysis by TELG managing principal R. Scott Oswald was published by Law360 on May 26, 2015. The full article is available at Law360. (Site requires paid subscription.)
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The U.S. Supreme Court just settled two questions about when whistleblowers may file civil fraud cases on behalf of taxpayers under the False Claims Act. On the first question — whether filing deadlines are deferred in times of war — defendants have grabbed media attention with a victory that touches just a handful of cases.
But on the second, far weightier question, Justice Samuel Alito finally corrected a legal error that has caused federal courts to strangle countless credible qui tam cases in their cribs. Justice Alito’s common-sense interpretation of the “first-to-file” rule is the true headline to emerge from Kellogg Brown & Root Services Inc. v. United States ex rel. Carter, and will affect FCA practice across a large swath of the U.S.
In many jurisdictions prior to Tuesday’s decision in Carter, defendants accused of fraud under the FCA could avoid facing justice by pointing to a similar claim that was filed earlier — even if that claim had died without reaching the merits. In the First, Fifth, Ninth and D.C. Circuits, such a failed claim might preclude all further cases based on the same underlying facts.
