Ninth Circuit Sits En Banc to “Tidy Up the Law” on the False Claims Act’s First to File Rule

In September 2024, the Ninth Circuit reversed in part a district court's dismissal of an action under the False Claims Act (FCA or the "Act") for lack of jurisdiction under the Act's First-to-File Rule and held that the First-to-File Rule is not jurisdictional. In doing so, the en banc court overruled circuit precedent and brought the Ninth Circuit in line with several other circuits.

In Stein ex rel. United States v. Kaiser Foundation Health Plan, Inc., the relators alleged that Kaiser-related entities committed Medicare fraud. The district court dismissed the action as barred by the first-to-file rule, 31 U.S.C. § 3730(b)(5) (the "First-to-File Rule"), because it related to earlier-filed pending actions against the same defendants.

On appeal, the three-judge panel affirmed, applying the Ninth Circuit's precedent that the First-to-File Rule is jurisdictional. The en banc court convened to "tidy up the law." In doing so, it overruled prior Ninth Circuit precedent and held that the First-to-File Rule is not jurisdictional.

The FCA's First-to-File Rule states: "When a person brings an action under this subsection, 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).

Applying the Supreme Court's recent holding in Santos-Zacaria v. Garland, 598 U.S. 411 (2023), that a statutory bar is jurisdictional only if Congress clearly states that it is, the en banc court held that the First-to-File Rule is not jurisdictional because § 3730(b)(5) does not use the term "jurisdiction" or "include any other textual clue that points to jurisdiction," unlike other provisions in the FCA that use explicitly jurisdictional language.

The Ninth Circuit has joined the First, Second, Sixth, and D.C. Circuits in agreeing that the FCA's First-to-File Rule is not jurisdictional. See United States ex rel. Bryant v. Cmty. Health Sys., Inc., 24 F.4th 1024, 1036 (6th Cir. 2022); United States v. Millenium Labs., Inc., 923 F.3d 240, 248-51 (1st Cir. 2019); United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 85-86 (2d Cir. 2017) (per curiam); United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 119-21 (D.C. Cir. 2015).

The Ninth Circuit's decision notes that three other circuits have held that the First-to-File Rule is jurisdictional. See United States ex rel. Carter v. Halliburton Co., 866 F.3d 199, 203 (4th Cir. 2017); United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009); Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004). However, the Ninth Circuit observed that these cases predate the Supreme Court's decision in Santos-Zacaria holding that a statutory bar is jurisdictional only if Congress clearly states that it is.

Although the circuits remain split, the tide seems to be shifting in favor of finding the First-to-File Rule is not jurisdictional. In these circuits, defendants can still move to dismiss an FCA case under the First-to-File Rule, but now they will bear the burden of proof under Federal Rule of Civil Procedure 12(b)(6) rather than putting the burden on plaintiffs under Rule 12(b)(1).