Campbell v. Redding Medical Center
2005 WL 2001085, 421 F.3d 817 (2005)
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Rule of Law:
Under the False Claims Act's 'first-to-file' bar, 31 U.S.C. § 3730(b)(5), a previously filed qui tam action does not bar a subsequent related action if the first-filed complaint is jurisdictionally defective because the relator was not an 'original source' of publicly disclosed information as required by § 3730(e)(4)(A).
Facts:
- Defendants, including Redding Medical Center (RMC), Chae Moon, and Fidel Realyvasquez, were allegedly involved in a scheme of performing thousands of medically unnecessary invasive cardiac procedures.
- The defendants then allegedly submitted false claims for these unnecessary procedures to federal and state health insurance programs, including Medicare.
- On October 30, 2002, the FBI executed a search warrant at RMC as part of its investigation into the fraudulent billing scheme.
- On the same day, the U.S. Attorney's Office publicly released the Search Warrant Affidavit, disclosing the allegations of fraud to the public and the press.
- John Corapi was a former RMC patient and Joseph Zerga was his friend.
- Patrick Campbell was a local physician who also possessed information about the alleged scheme.
Procedural Posture:
- On November 5, 2002, John Corapi and Joseph Zerga filed a sealed qui tam complaint in the U.S. District Court for the Eastern District of California against RMC and others.
- Three days later, on November 8, 2002, Patrick Campbell filed his own related qui tam complaint in the same court against the same defendants.
- The United States government moved to dismiss Campbell's complaint under Fed. R. Civ. P. 12(h)(3) for lack of subject matter jurisdiction, arguing it was barred by the FCA's first-to-file rule.
- The district court, assuming for the purposes of the motion that Corapi and Zerga were not 'original sources,' granted the government's motion to dismiss Campbell's action.
- The district court subsequently denied Campbell's objections to a government settlement, finding he lacked standing because his case had been dismissed.
- Campbell (appellant) appealed the dismissal of his complaint and the denial of his objections to the U.S. Court of Appeals for the Ninth Circuit, with the United States as the appellee on the dismissal issue.
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Issue:
Does the False Claims Act's 'first-to-file' bar, 31 U.S.C. § 3730(b)(5), prevent a subsequent related qui tam action when the first-filed action is subject to dismissal for lack of subject matter jurisdiction because its relator was not an 'original source' of publicly disclosed information?
Opinions:
Majority - Silverman
No. The False Claims Act's first-to-file bar does not preclude a subsequent related action when the first-filed complaint is jurisdictionally defective because the relator is not an 'original source.' For the first-to-file bar to apply in a public disclosure case, the first-filed complaint must itself fulfill the jurisdictional prerequisites of § 3730(e)(4). The court's prior decision in United States ex rel. Lujan v. Hughes Aircraft Co. is distinguishable because it involved a first-filed action that was dismissed on the merits, not for a lack of jurisdiction. The primary purpose of the 1986 amendments to the False Claims Act was to encourage whistleblowers with genuine inside information while discouraging 'parasitic' lawsuits by opportunistic plaintiffs. An absolute first-to-file rule would undermine this intent by allowing a non-original source to file a sham 'placeholder' complaint based on public information, thereby blocking a later, meritorious suit by a true original source who possesses valuable information for the government. Such an outcome would contravene Congress's clear intent to reward insiders and encourage more private enforcement actions.
Analysis:
This decision clarifies the relationship between the False Claims Act's 'first-to-file' bar (§ 3730(b)(5)) and the 'public disclosure' bar's 'original source' exception (§ 3730(e)(4)). By holding that a jurisdictionally defective complaint does not trigger the first-to-file bar, the court prevents opportunistic plaintiffs from winning the 'race to the courthouse' based solely on public information. This ruling strengthens protections for true whistleblowers, ensuring that the first person to file must have a substantively valid claim, not just a chronologically earlier one. The decision also creates a procedural requirement for district courts to assess the jurisdictional validity of the first-filed complaint before dismissing a subsequent one, potentially leading to more consolidated proceedings to determine who qualifies as the true 'original source' relator.
