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What is the first-to-file rule in False Claims Act cases?

| Feb 11, 2021 | Whistleblowing |

If you are considering reporting fraud per the False Claims Act, you must act quickly, especially if you are looking for a potential monetary reward. That is why the first thing that you need to do is to get your qui tam case on file before any other potential whistleblower beats you to it. If you do not, it can ultimately bar you from recovery. 

To better help you understand the False Claims Act and the process involved with filing a claim, this guide will walk you through everything you need to know about the “first-to-file” rule.

The False Claims Act (FCA): The background

The federal government uses the False Claims Act as the primary statute to police fraud in government programs. The FCA is a way for the government to recover civil penalties and treble damages while also containing a qui tam provision that allows private citizens or “relators” to sue on behalf of the United States and obtain a portion of the judgment.

However, to ensure that the Act was effective and to prevent duplicative filed litigation by relators, Congress included the first-to-file rule as part of its 1986 amendments to the FCA.

First-to-File rule: What is it?

According to the False Claims Act, no other individual other than the Government can intervene or bring a related action based on the facts that are underlying the pending or previously litigated action. This “first-to-file” rule bars any further allegations of fraud if these later allegations state all the essential facts of a previously-filed whistleblower claim or contain the same elements of a fraud described in an earlier qui tam suit. 

Consequently, only the whistleblower who first reported the fraud to the government can recover compensation for providing the information.

Why is there a First-to-File rule?

When it comes to the first-to-file rule, there are, in fact, many reasons why it exists. For instance, it:

Provides incentives

This rule is intended to provide some incentive to alert the government as quickly as possible of a potentially fraudulent scheme. Because only the first person to report the fraud receives compensation, it encourages whistleblowers to report what they know as quickly as possible. As a result, the rule also furthers the government’s interest in recovering the money they paid out because of the fraud. 

Discourages lawsuits

The first-to-file rule discourages any other lawsuits based on the same information or facts that have been already litigated. This can help the government only focus on evidence that enhances their ability to investigate and prosecute fraudulent actions. If the government allowed further whistleblowers to provide the same information that they were already made aware of, it would cause unneeded suits to proceed and drain the government’s resources. 

You need to act quickly to get the recovery you want

As a potential whistleblower, it is critical that you take several vital steps as quickly as possible because of the first-to-file rule. These actions include the following:

  • File a qui tam complaint as soon as you can to ensure that the claim is not barred and that you receive credit for reporting the fraud first.
  • If a previous fraud has been reported at the same business, you will need to distinguish how the previously filed case is different from your new qui tam complaint and should result in a separate recovery for the government.
  • Hire an experienced employment law attorney that can help you with your qui tam suit and ensure your claim is filed correctly and promptly.

It is also critical to note the following:

  1. An individual cannot file a qui tam case as it is filed on behalf of the government so it must be filed by a skilled attorney, highly experienced in False Claims Act successes.
  2. Since the complaint must be pled to a high standard of detail to be viable, gathering data as early as possible is crucial.
  3. Focusing on the fact that these cases are filed under seal and if anyone else is told about it, the whistleblower may then be disqualified from receiving any share of the recovery.

When proceeding with a qui tam claim, you want to make sure that it is the first one on file. Working with a skilled lawyer can help you achieve this objective. Plus, if there are other complaints on file, these attorneys can also help you distinguish your claim and prevent it from getting barred, ultimately helping you maximize your potential recovery.