The FCA imposes treble damages and penalties on those who submit false or fraudulent claims for payment to the United States government. 31 U.S.C. § 3729(a) The FCA encourages private parties, called "relators," who are aware of fraud against the government to bring an action under the qui tam provisions of the FCA. If the government intervenes and the action is successful, the qui tam relator may share in up to 25 percent of the government's recovery. 31 U.S.C. § 3730(d)(1). Successive qui tam lawsuits are not permitted, however, and only the first to file a qui tam action may qualify to share in the government's recovery.

Section 3730(b)(5) of the FCA provides: "When a person brings an action under [the qui tam provisions of the FCA], no person other than the government may intervene or bring a related action based on the facts underlying the pending action." This statutory provision, often referred to as the first-to-file rule, encourages qui tam relators to promptly disclose their knowledge of fraud against the government by creating a race to the courthouse among those with knowledge of fraud.

In United States ex rel. v. Campbell v. Redding Medical Center, 421 F.3d 817 (9th Cir. 2005), the Ninth Circuit held that not all qui tam complaints qualify as a "pending action" under § 3730(b)(5). In Campbell, two qui tam lawsuits were filed against Redding Medical Center shortly after the government released a search warrant affidavit to the public and to the press which disclosed that the FBI had executed a search warrant at Redding Medical Center on or about October 30, 2002. Both lawsuits alleged that unnecessary invasive cardiac procedures had been performed at Redding Medical Center and billed to the government in violation of the FCA. The first qui tam lawsuit, filed by a former Redding Medical Center patient, John Corapi, and his friend, Joseph Zerga, was filed on November 5, 2002. Three days later, on November 8, 2002, a local physician, Patrick Campbell, filed his own complaint under the FCA against the same defendants.

Because Campbell's complaint was filed after the initial qui tam complaint, the United States moved to dismiss Campbell's complaint pursuant to Federal Rule of Civil Procedure 12(h)(3) for lack of subject matter jurisdiction. Because both lawsuits were based on the same underlying facts, the government argued that the court lacked subject matter jurisdiction over Campbell's action pursuant to the FCA's first-to-file rule, 31 U.S.C. § 3730(b)(5). In response to the government's motion to dismiss, Campbell argued that the Corapi and Zerga qui tam complaint did not qualify as a "pending action" under § 3730(b)(5) because the district court lacked jurisdiction over that complaint pursuant to § 3730(e)(4)(A) of the FCA. Section 3730(e)(4)(A) of the FCA provides that "[n]o court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions unless the person bringing the action is an original source of the information." This provision, commonly referred to as the public disclosure bar, prevents opportunistic plaintiffs from bringing qui tam actions and sharing in the government's recovery when they have done nothing to expose the allegations of fraud.

The district court granted the government's motion to dismiss Campbell's action. In doing so, the district court assumed that Campbell was correct and that Corapi and Zerga were not original sources, but held that Campbell's suit was nevertheless barred by the first-to-file rule under the Ninth Circuit's previous decision in United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181 (9th Cir. 2001). In Lujan, two former Hughes Aircraft employees brought separate qui tam actions against the company, alleging that Hughes was engaged in fraudulent contract pricing. The first qui tam action, filed by William Schumer, was ultimately dismissed on the merits after the government refused to intervene in the lawsuit. Subsequently, defendant Hughes moved to dismiss the latter qui tam action filed by Linda Lujan, pursuant to the first-to-file rule. The district court granted Hughes' motion and the Ninth Circuit affirmed, reasoning that:

Section 3730(b)(5)'s plain language unambiguously establishes a first-to-file bar, preventing successive plaintiffs from bringing related actions based on the same underlying facts .. Moreover, an exception free, first-to-file bar conforms with the dual purposes of the 1986 amendments [to the FCA]: to promote incentives for whistle-blowing insiders and prevent opportunistic successive plaintiffs.

Lujan, 243 F.3d at 1187. The Ninth Circuit reasoned that the subsequent dismissal of the initial qui tam action filed by Schumer did not affect operation of the first-to-file bar because "[d]ismissed or not, Schumer's action promptly alerted the government to the essential facts of a fraudulent scheme — thereby fulfilling a goal behind the first-tofile rule. Accordingly, we .hold that Schumer was a 'pending action' under § 3730(b)(5)." Id. at 1188.

In reversing the district court's decision, the Ninth Circuit distinguished the Lujan case from the case before the court. The Ninth Circuit reasoned that a qui tam action filed by a non-original source following public disclosure of the allegations does not "alert[ ] the government to the essential facts of a fraudulent scheme." Compare Lujan, 243 F.3d at 1188. Because the FCA permits only an original source to bring a qui tam action following public disclosure of the allegations, construing the first-to-file rule to create an absolute bar would permit opportunistic plaintiffs with no inside information to displace actual insiders who have knowledge of the fraud. Accordingly, the Campbell court held that a jurisdictionally defective qui tam complaint does not trigger the first-to-file rule under the FCA. The Ninth Circuit reasoned that in a public disclosure case, the first-to-file rule of § 3730(b)(5) bars only subsequent complaints filed after a complaint fulfilling the jurisdictional prerequisites of § 3730(e)(4) has been filed. In other words, in a public disclosure case, only those who qualify as an original source may enter the race to the courthouse.