Any whistleblower who is considering reporting fraud under the False Claims Act should be aware and have a basic understanding of the “first to file” rule. This rule makes it imperative that whistleblowers file their action before any other potential whistleblower, as doing so is a necessary and critical part of any potential recovery.
The False Claims Act is set out in 31 U.S.C. § 3730(b)(5). The law provides that no person other than the Government can intervene or bring a related action based on the facts in the underlying pending action. The “first to file rule” bars later allegations of fraud based on the same basic facts or allegations of fraud as already set out in a previous action.
The Purpose of the First to File Rule
There are several reasons behind the adoption of the first to file rule. First, the rule is intended to provide motivation to individuals who promptly alert the government to the facts of a fraudulent scheme. The whistleblower that first reports the fraud to the government will be the only one who can recover a monetary award for providing such information. By encouraging the whistleblowers to report the fraud as soon as possible, the rule also serves the interests of the government in recovering money paid out as a result of the fraud.
Second, the first to file rule under the False Claims Act discourages the filing of additional lawsuits based on the same facts that have already been or are being litigated in earlier filed petitions because this would not enhance the government’s ability to investigate and uncover fraud. Once the government is aware of the fraud after the filing of the initial action, allowing additional lawsuits would only drain government resources with no potential for additional recovery.
The First to File Rule Bars Related Actions
In examining the first to file rule, most courts have interpreted the meaning of “related action” based on the underlying facts of the pending action quite broadly. The facts of the second qui tam do not have to be identical for the suit to be barred under the first to file rule. Most courts instead look to whether the claim involves the same type of fraud, the same essential elements, or the same material elements of fraud.
Courts will look to two central questions: 1) Does the second qui tam suit allege a different type of wrongdoing based on facts different from those presented in the first suit? 2) Does the second action give rise to a separate and distinct recovery by the government? Looking at all these factors, the court will determine whether the second action is barred by the first to file rule.
Key Points to Take Away from the First to File Rule
Potential whistleblowers should glean from the first to file rule that it is absolutely essential they bring their claim as early as possible to ensure it will not be barred. Additionally, whistleblowers should also takeaway the importance of retaining an experienced qui tam attorney who will help them bring this complex action.
Barrett Law PLLC: Representing False Claim Act Whistleblowers in Mississippi
The experienced Mississippi Qui Tam Lawyers at Barrett Law PLLC understand the importance of being the first to file in a qui tam action under the False Claims Act. We have guided countless whistleblowers through the filing of qui tam actions under the False Claims Act. We understand what it takes to bring a successful action from our over 75 years in the industry. At Barrett Law PLLC, we offer a free consultation to all new clients and operate on a contingency fee basis. For representation of unmatched excellence, call Barrett Law PLLC today at 1 (800) 707-9577 to schedule your free consultation.