Ninth Circuit Case Provides New Insight into Government Action Bar

By on December 20, 2017

When is a new qui tam lawsuit derivative of a lawsuit in which the government has already intervened? The US Court of Appeals for the Ninth Circuit answered that question on December 1, 2017, when it decided United States ex rel. Bennett v. Biotronik, Inc. In doing so, the Ninth Circuit addressed the “government action bar” contained in 31 U.S.C. § 3730(e)(3), which states that a relator may not bring a qui tam suit “based upon allegations or transactions which are the subject of a civil suit . . . in which the Government is already a party.”  31 U.S.C. § 3730(e)(3).

The Ninth Circuit in Bennett was faced with False Claims Act (FCA) claims predicated on facts that had already been the basis of a prior qui tam action against the defendant, Biotronik. The government had since settled and dismissed several (but not all) claims in the prior action. The district court dismissed the relator’s complaint based upon the government action bar. In affirming the district court’s dismissal, the Ninth Circuit reached two relevant conclusions.

First, the Ninth Circuit concluded that the government action bar applies even where the action is no longer pending, noting that the government does not cease to be a party to a case even after the action has concluded. Bennett, 2017 WL 5907900, at *5. The relator argued that the government action bar only precludes follow-on qui tam suits when the government “is” already party, noting the fact that “is” is in the present tense. In response, the Ninth Circuit said that an individual who is dead is no longer a party to the case, but that “the government never dies.”  Accordingly, if the government has ever intervened in a case in which is “based upon [the same] allegations or transactions,” a later action is forever barred by § 3730(e)(3).

Second, the Ninth Circuit rejected Bennett’s contention that because the government did not settle all of the claims in the first action when it settled the first action, that the government action bar did not apply to the non-settled claims. In rejecting this contention, the court noted that the government’s intervention in the first action barred relitigation of any claims raised therein.

Overall, this case highlighted the value of the government action bar to defendants in challenging “parasitic” qui tam actions.