On April 4, 2017, in United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80 (2nd Cir. 2017), the Second Circuit joined the D.C. Court of Appeals in holding that the first-to-file bar is not jurisdictional, and therefore, that a court is not deprived of subject matter jurisdiction upon a first-to-file bar finding.
Generally speaking, the first-to-file rule, 31 U.S.C. § 3730(b)(5), prohibits an individual from bringing a qui tam action if there is already another pending action based on the same facts. The courts agree that the first-to-file bar “functions both to eliminate parasitic plaintiffs who piggyback off the claims of a prior relator, and to encourage legitimate relators to file quickly by protecting the spoils of the first to bring a claim.” In re Nat. Gas Royalties Qui Tam Litigation, 566 F.3d 956 (10th Cir. 2009) (citing Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1279 (10th Cir.2004); Wisconsin v. Amgen, Inc., 516 F.3d 530, 532 (7th Cir.2008); Campbell v. Redding Med. Center, 421 F.3d 817, 821 (9th Cir.2005)). As the Hayes court recognized, however, courts disagree on whether the first-to-file bar is jurisdictional. Compare United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371 (5th Cir. 2009) (holding that the first-to-file bar is jurisdictional), with United States ex rel. Heath v. AT&T, 791 F.3d 112 (D.C. Cir. 2015) (holding that first-to-file bar is not jurisdictional).
In concluding that the first-to-file bar is not jurisdictional, the Hayes court cited to guidance from the Supreme Court that jurisdictional bars should be employed only where Congress “has clearly stated that the rule is jurisdictional” and that in the absence of such a clear statement, the statutory restrictions should be seen as “nonjurisdictional in nature.” 853 F.3d at 86 (quoting Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145 (2013)). Relying on this principle, the Hayes court reasoned that 31 U.S.C. § 3730(b)(5) does not reference jurisdiction or speak in jurisdictional terms; instead, it provides only who may bring a qui tam action and when such an action can be brought. The Hayes court then contrasted the absence of jurisdictional language in Section 3730(b)(5) against the explicit invocations of jurisdiction in Sections 3730(e)(1) and 3730(e)(2)(A) to conclude that the first-to-file bar is not jurisdictional.
While the Hayes court found that the first-to-file bar is not jurisdictional in the Second Circuit, it should be made clear that Hayes does not inhibit or significantly weaken the first-to-file defense. Instead, it simply means that a first-to-file bar claim goes to the merits of whether the relator stated a claim. While this impacts how and when the first-to-file bar defense can be raised, it will not change the fact that relators are barred from filing related FCA actions based on the same facts of an already pending case.