By Kristin Graham Koehler, a Partner, and Joshua Fougere, an Associate, with Sidley Austin LLP in the firm’s Washington, DC office.

The U.S. Court of Appeals for the Second Circuit recently joined a growing majority view by holding that a violation of the False Claims Act’s (FCA) “first-to-file bar cannot be remedied by amending or supplementing the complaint” but, instead, requires dismissal.  United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163, 166 (2d Cir. 2018).

The first-to-file bar is “one of several … provisions” in the FCA that help to avoid the “danger of parasitic exploitation of the public coffers.”  Id. at 167.  It provides that, “[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”  31 U.S.C. § 3730(b)(5).  This “ensures that only one relator shares in the Government’s recovery and encourages potential relators to file their claims promptly.”  Wood, 899 F.3d at 167.

In July 2010, relator John Wood sued Allergan, Inc. in the Southern District of New York, alleging that the company had violated the FCA through a kickback scheme causing federal and state governments to make false claims for Allergan drugs.  At that time, however, “two other actions alleging similar FCA violations were pending” but under seal—one in New Jersey (filed in October 2008) and another in the District of Columbia (filed in January 2010).  Id.  Like Wood, those cases “allege[d] a scheme where Allergan provided free cataract surgery recovery kits to induce increased use of Allergan products.”  Id. at 169.