JUDGMENT: ORDERED that Branch’s claims against Allstate are DISMISSED W/OUT PREJ on first-to-file grounds. FURTHER ORDERED that Branch’s claims against American Reliable, Standard Fire, Colonial, Liberty Mutual, SIMSOL, ANPAC, Fidelity, and Pilot are DISMISSED WITH PREJ because Branch is not an original source of those claims, a determination that is intertwined with the merits and that was decided on summary judgment. FURTHER ORDERED that the inflated-revenue claims, added by amendment, are DISMISSED W/OUT PREJ because the Court lacks jurisdiction over Branch’s original ccmp. Signed by Chief Judge Sarah S. Vance on 1/25/11.(bbc, ) (Entered: 01/25/2011)
story Order and Reasons short, Judge Vance took 68-pages to explain how Branch failed to comply with the requirements of the False Claims Act.
As the Judgment indicates, the dismissal of Branch centered on two key points of qui tam law – the “first to file” and the “original source” requirements.
In his “stock basher style” post announcing the dismissal, Sop opined Vance had “busted Allen Kanner’s balls”. Maybe so, but, her very exact detailing of what appear to be preventable deficiencies in the filing and content of the Complaint would have definitely crushed his ego.
You won’t see such deficiencies in Rigsby. Think what you will about Dick Scruggs but, in this situation, he knew his limits and, early on, put the case in the expert hands of a team of attorneys with experience specific to cases filed under the False Claims Act. Kanner, on the other hand, filed Branch – but that alone did not lead to the dismissal.
“subject-matter jurisdiction ‘depends on the state of things at the time of the action brought.’ “
Every qui tam Relator files without knowing if a similar sealed claim exists. The Branch Complaint was filed and sealed August 2, 2006, naming both State Farm and Allstate among the defendants that allegedly filed false claims with the government’s National Flood Insurance Program (NFIP) following Hurricane Katrina. However, the Rigsbys’ qui tam case was filed and sealed on the 26th of April and it, too, alleged filed false claims were filed with the NFIP following the hurricane and also included both State Farm and Allstate among the named defendants.
Consequently, Rigsby holds first-to-file status and the concomitant subject matter jurisdiction rests with the southern district Mississippi federal court.
Little else about Judge Vance’s decision can be as simply stated. What I can and will do is briefly address a few of the points of interest and refer those who want more to the full copy of her Order and Reasons for dismissal of Branch in Scribd format at the end of this post.
Point: Deficiencies in the filing of the Complaint
As this Court has noted, it is “undisputed” that a relator must voluntarily provide the information underlying its allegations to the government before filing suit.
The prefiling disclosure requirement is distinct from the requirement of § 3730(b)(2) that the relator serve the government with “[a] copyof the complaint and written disclosure of substantially all material evidence and information the person possesses[.]”
In this case, Branch made its first disclosure to the government on August 2, 2006, the same day it filed the original complaint. Branch’s attorney Allan Kanner asserts that he did not file the complaint until after he discussed the allegations with Assistant U.S. Attorney Sharon Smith, provided her with a copy of the complaint and written disclosure statement, and received confirmation that a copy of the complaint and the disclosure statement had been delivered to the Department of Justice in Washington.
Defendants argue that Branch’s disclosure is insufficient under 31 U.S.C. § 3730(e)(4)(B) because it was made the same day the complaint was filed…
Point: Deficiencies in the content of the Disclosure
Judge Vance follows stating, “the Court does not need to reach that issue. Instead, the Court will consider whether the contents of Branch’s disclosures are sufficient”.
Under 31 U.S.C. § 3730(e)(4)(B), “the information” that the relator must provide to the government before filing is “the information on which the allegations are based,” about which the relator must have “direct and independent knowledge.” This implies that the relator must disclose to the government the information it relies upon in asserting that it is an original source.
Thus, Branch must demonstrate that the information contained in its pre-filing disclosure is sufficient to make it an original source. To be an original source, a relator’s knowledge of the information underlying its allegations must be both direct and independent.
In making its original source showing, Branch cannot rely on the two supplemental disclosures it made to the government after filing the original complaint but before filing the First Amended.
If Branch was not an original source at the time it filed the original complaint because it had not adequately disclosed its allegations to the government, this Court lacks jurisdiction.
When all was said and done, Branch’s claims against all defendants, with the exception of Allstate, were dismissed with prejudice because “Branch’s original disclosure was insufficient”.
Point: Allstate is a “sitting duck”
“if it looks like a duck, walks like a duck and quacks like a duck, it’s a duck” (even if it’s sitting “dismissed without prejudice”)
Allstate has the distinction of being a named defendant in four different qui tam cases! The Rigsby sisters voluntarily dismissed the Company as a defendant but currently retains jurisdiction under the first-to-file rule.
It was Judge Vance’s application of this same rule that resulted in her decision to dismiss Allstate without prejudice in Branch and shortly thereafter, Denenea as well. Had Sonnier been before her Court, it would likely have suffered the same fate.
Time will tell.
Time will also tell if Branch will appeal Judge Vance’s decision. In my non-lawyer opinion, some of her reasoning may very well prove to be shakey – but SLABBED reports, you decide.
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