The First Circuit ruled last week that an earlier-filed False Claims Act complaint will preclude a later-filed complaint if it arises out of the same underlying facts, even if the allegations are not identical.

The case concerns claims by two relators asserting claims against Bristol-Myers Squibb, Inc. (“BMS”) and Sanofi-Aventis U.S. LLC (“Sanofi”).  In May 2006, a BMS Manager, David Richardson, filed suit against BMS and/or Sanofi alleging that they promoted Plavix for off-label uses, promoted Pravachol and Monopril, and “knowingly” caused the submission of false claims to the government in violation of the FCA.  In September 2006, Michael A. Wilson also filed suit alleging that BMS and Sanofi promoted Plavix for off-label uses.  Wilson’s suit, however, alleged that the off-label uses were for different diseases and symptoms than those alleged in Richardson’s suit.

The trial court concluded that Richardson’s May 2006 complaint precluded Wilson’s September 2006 claims because they were “substantially similar” to Richardson’s, and thus barred by the FCA’ s first-to-file rule.  The trial court applied the “essential facts” test to make this determination, finding that Wilson’s complaint “did not alert the government to a new type of fraudulent scheme or even new aspects of an existing scheme allegedly being perpetrated by the defendants.”  The only difference between the two suits, the trial court wrote, was that Wilson’s complaint alleged different particular off-label uses for the drugs.

In affirming the district court, the First Circuit emphasized that the purpose of the first-to-file rule is “to provide incentives to relators to ‘promptly alert [] the government to the essential facts of a fraudulent scheme.’”  The Court also noted that the rule is “part of the larger balancing act of the FCA’s qui tam provision, which ‘attempts to reconcile two conflicting goals, specifically, preventing opportunistic suits, on the one hand, while encouraging citizens to act as whistleblowers, on the other.’”

Additionally, the Court cited the statutory text as the basis for the rule, noting that earlier-filed complaints need only provide essential facts to give the government sufficient notice to initiate an investigation into allegedly fraudulent practices.  The “essential facts” rule is in line with the plain language and legislative intent of the first-to-file rule, whereas an “identical facts” rule would not be.

The full opinion is available here.