FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PATRICK CAMPBELL, M.D., United
States of America and State of
California ex rel.,
Plaintiff-Appellant,
UNITED STATES OF AMERICA,
Intervenor-Appellee,
v.
REDDING MEDICAL CENTER, a
California corporation; TENET No. 03-17082
HEALTHCARE CORPORATION, a
Nevada corporation; CHAE HYUN D.C. No.
CV-02-02457-DFL
MOON, M.D.; THOMAS RUSS, M.D.; OPINION
FIDEL REALYVASQUEZ, M.D.; TENET
HEALTHSYSTEM HOSPITALS, INC., a
Delaware corporation; CARDIOLOGY
ASSOCIATES OF NORTHERN
CALIFORNIA; RICARDO MORENO-
CABRAL, M.D., dba Cardiac
Thoracic and Vascular Surgery
Medical Group,
Defendants.
Appeal from the United States District Court
for the Eastern District of California
David F. Levi, District Judge, Presiding
Argued and Submitted
July 14, 2005—San Francisco, California
Filed August 22, 2005
11117
11118 CAMPBELL v. UNITED STATES
Before: Barry G. Silverman, Kim McLane Wardlaw, and
Richard R. Clifton, Circuit Judges.
Opinion by Judge Silverman
11120 CAMPBELL v. UNITED STATES
COUNSEL
David Rude, Clark & Rude, San Jose, California, for the
appellant.
Peter D. Keisler, McGregor W. Scott, Michael A. Hirst,
Douglas N. Letter and Irene M. Solet, Civil Division, Depart-
ment of Justice, Washington, D.C., for the appellee.
CAMPBELL v. UNITED STATES 11121
OPINION
SILVERMAN, Circuit Judge:
The False Claims Act provides that “[n]o court shall have
jurisdiction” over a qui tam action based on allegations of
fraud that already have been publicly disclosed, unless the
relator was an “original source” of the information. 31 U.S.C.
§ 3730(e)(4)(A). In addition, the Act precludes any person
from filing a subsequent “related action based on the facts
underlying the pending action” when a qui tam action already
has been filed. Id. § 3730(b)(5). This is known as the first-to-
file bar. The question before us is whether the first-to-file bar
prevents the filing of a subsequent related action when the
first action is jurisdictionally defective because the relator was
not an original source of publically disclosed information. We
hold today that it does not. If the first-filed qui tam action was
not filed by an original source and is therefore not jurisdic-
tionally cognizable, it does not constitute the first-filed com-
plaint for the purposes of § 3730(b)(5).
I. Factual and Procedural Background
This lawsuit arises out of a scheme involving the perfor-
mance of thousands of unnecessary invasive cardiac proce-
dures at the Redding Medical Center (“RMC”) for the
purposes of fraudulently billing Medicare. On October 30,
2002, Magistrate Judge Peter Nowinski issued a medical
records search warrant authorizing the FBI to investigate
RMC and the medical offices of the defendant doctors. The
FBI executed the search warrant at RMC that same day. The
U.S. Attorney’s Office also released the Search Warrant Affi-
davit to the public and the press on October 30.
On November 5, 2002, John Corapi, a former RMC patient,
and Joseph Zerga, his friend, filed a sealed qui tam complaint
pursuant to the False Claims Act, 31 U.S.C. § 3729-3733
(“FCA”), and the California False Claims Act in the United
11122 CAMPBELL v. UNITED STATES
States District Court for the Eastern District of California
against RMC; Tenet Healthcare Corporation; Chae Moon,
RMC’s director of Cardiology; and Fidel Realyvasquez, the
Chairman of RMC’s Cardiac Surgery Program. The Corapi/
Zerga complaint alleged that the defendants had submitted
false claims to federal and state medical insurance programs
and stated that they had direct and independent knowledge of
the facts underlying the complaint and had brought that infor-
mation to the attention of the United States government. The
Corapi/Zerga suit was assigned to Judge William Shubb.
Three days later, on November 8, 2002, Patrick Campbell,
a local physician, filed his own complaint under the FCA and
the California statute in the same court against the same
defendants. Campbell later amended his complaint to accuse
the defendants of engaging in a scheme to defraud state- and
federally-funded health care insurance programs, including
Medicare, Medicaid, and MediCal, by submitting claims for
cardiac care that the defendants knew to be medically unnec-
essary or inappropriate. The complaint alleged that the defen-
dants had performed medically unjustified invasive diagnostic
coronary artery imaging tests and then misrepresented the
results of these tests to patients so that they would undergo
invasive cardiac procedures. Campbell’s complaint was
assigned to Judge David Levi. The government and Campbell
separately filed notices of related cases, but Judge Shubb
declined to treat the cases as related.
The United States moved to dismiss Campbell’s complaint
pursuant to FED. R. CIV. P. 12(h)(3) for lack of subject matter
jurisdiction. The government argued that Campbell’s action
was based on the same facts underlying the Corapi/Zerga
complaint and therefore was barred under the FCA’s first-to-
file bar, 31 U.S.C. § 3730(b)(5).
Campbell argued in response that because Corapi and
Zerga were not original sources the district court had no juris-
diction over their action and their suit could not be considered
CAMPBELL v. UNITED STATES 11123
a pending action for the purposes of the first-to-file bar.
Campbell asked the district court to assume for the purposes
of the motion that the Corapi/Zerga suit would be dismissed
for lack of standing. The government responded that it took
no position on whether the Corapi/Zerga complaint was juris-
dictionally flawed, arguing that, “[t]hat analysis is irrelevant
to the issue of whether the Court has subject matter jurisdic-
tion of Campbell’s complaint.”
The district court granted the government’s motion to dis-
miss Campbell’s action. In doing so, the court assumed that
Corapi and Zerga were not original sources, but held that
Campbell’s suit was nevertheless barred by the first-to-file
rule, citing United States ex rel. Lujan v. Hughes Aircraft Co.,
243 F.3d 1181 (9th Cir. 2001).
The United States subsequently announced that it had set-
tled its civil claims against RMC and Tenet Healthcare Cor-
poration for payment of $54 million. Campbell filed with
Judge Levi objections to the settlement and sought a hearing
on its fairness pursuant to 31 U.S.C. § 3730(c)(2)(B) and dis-
covery regarding the amount of and reasons for the settle-
ment. The government responded that Dr. Campbell’s motion
should be denied because his case had been dismissed and he
had no standing to object to the settlement. The district court
agreed with the government and denied Dr. Campbell’s objec-
tions, concluding that Dr. Campbell had no standing to object
to the government’s settlement or to demand a fairness hear-
ing.
Dr. Campbell appealed both the district court’s order dis-
missing his complaint and the denial of his objections to the
settlement.
The United States subsequently notified the district court in
the Corapi/Zerga suit that it intended to pay those plaintiffs
$8.1 million as the relators’ share of the $54 million recovery
11124 CAMPBELL v. UNITED STATES
by the United States in that case. However, that payment has
not been finalized.
II. Jurisdiction and Standard of Review
We have jurisdiction to review the district court’s dismissal
for lack of subject matter jurisdiction under 28 U.S.C. § 1291.
Luong v. Circuit City Stores, Inc., 368 F.3d 1109, 1111 (9th
Cir. 2004). The district court’s dismissal of a claim for lack
of subject matter jurisdiction is reviewed de novo. Hacienda
Valley Mobile Estates v. City of Morgan Hill, 353 F.3d 651,
654 (9th Cir. 2003), cert. dismissed, 125 S. Ct. 1239 (2004,
2005).
III. Discussion
A. The False Claims Act
[1] The False Claims Act, 31 U.S.C. § 3729(a), imposes
liability on those who submit a false or fraudulent claim for
payment to the United States Government. The qui tam provi-
sions of the False Claims Act encourage private parties who
are aware of fraud against the government to sue for a civil
penalty on behalf of the government. Id. § 3730(b)(1). If the
government intervenes and the action is successful, such par-
ties will share in up to 25% of the government’s recovery. Id.
§ 3730(d)(1).
A private party, referred to as the “relator,” may bring a
civil action in the name of the government to recover damages
against a person who has defrauded the government. Id.
§ 3730(b)(1). The complaint is filed under seal. Id.
§ 3730(b)(2). “A copy of the complaint and written disclosure
of substantially all material evidence and information the per-
son possesses” is served on the government. Id. Within 60
days, the government must elect to either proceed with the
action itself, or notify the court that it declines to take over the
CAMPBELL v. UNITED STATES 11125
action, in which case the relator has the right to pursue the
action. Id. § 3730(b)(4).
[2] Section 3730(e)(4)(A) states 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.” Id. § 3730(e)(4)(A). This subsection prevents
opportunistic individuals from bringing qui tam actions —
and sharing in the government’s recovery — when they have
done nothing to expose the allegations of fraud. Compare
United States ex rel. Devlin v. California, 84 F.3d 358, 362
(9th Cir. 1996), with United States ex rel. Springfield Termi-
nal Ry. Co. v. Quinn, 14 F.3d 645, 651, 656-57 (D.C. Cir.
1994). For a court to have jurisdiction over a FCA case
brought by a private party after the allegations have been
made public, the relator must have been “an original source”
of the allegations. An “original source” is someone who has
“direct and independent knowledge of the information on
which the allegations are based” and has voluntarily provided
it to the government before filing suit. 31 U.S.C.
§ 3730(e)(4)(B); see also Devlin, 84 F.3d at 360 n.3 (internal
quotation marks omitted).
[3] Section 3730(b)(5) provides: “When a person brings an
action under [§ 3730(b)], no person other than the Govern-
ment may intervene or bring a related action based on the
facts underlying the pending action.” This is the first-to-file
bar, which encourages prompt disclosure of fraud by creating
a race to the courthouse among those with knowledge of
fraud. We previously have held that § 3730(b)(5) bars without
exception a subsequent related action, even if the first action
had been dismissed on the merits. Lujan, 243 F.3d at 1188.
The question before us is whether the first-to-file bar also pre-
cludes the filing of a subsequent related action when the first
complaint is subject to dismissal solely on jurisdictional
grounds— i.e., because the relator is not an original source of
allegations that already have been publicly disclosed.
11126 CAMPBELL v. UNITED STATES
B. The First-to-File Bar
The district court relied on our interpretation of
§ 3730(b)(5) in Lujan for the conclusion that the first-to-file
bar operates independently of § 3730(e)(4) and that any com-
plaint filed, even if jurisdictionally flawed, would bar all sub-
sequent complaints related to the same underlying facts. We
disagree with this conclusion for two reasons. First, Lujan did
not contemplate the situation presented to us today, which
involves publicly disclosed allegations that are particularly
vulnerable to opportunistic qui tam suits. Second, such an
interpretation of § 3730(b)(5) would contravene the intent of
Congress in enacting the 1986 amendments to the FCA. Con-
gress sought to provide incentives to qui tam whistleblowers
to come forward, and we believe that an overly broad inter-
pretation of the first-to-file bar, allowing even sham com-
plaints to preclude subsequent meritorious complaints in a
public disclosure case, would contravene this intention.
1. United States ex rel. Lujan v. Hughes Aircraft Co.
First we address the district court’s ruling that Lujan com-
pels dismissal of Campbell’s claim. Linda Lujan, a former
Hughes Aircraft Employee, brought a qui tam suit in 1992,
alleging that Hughes was engaged in fraudulent contracting
prices. Lujan, 243 F.3d at 1184. William Schumer, also a for-
mer Hughes employee, had previously filed his own qui tam
suit in 1989, also challenging the allocation of costs in
Hughes’ contracts with the government. Id. at 1183. The gov-
ernment declined to intervene in Schumer’s suit, and
Schumer’s action was subsequently dismissed on the merits.
Id. at 1183-84. Hughes moved to dismiss Lujan’s action under
31 U.S.C. § 3730(b)(5). Id. at 1186. The district court granted
the motion, finding that Lujan’s claims were “based on the
same essential facts and raised the same issues as Schumer’s
claims,” and were therefore barred under 31 U.S.C.
§ 3730(b)(5). Id. (internal quotation marks omitted). We
agreed:
CAMPBELL v. UNITED STATES 11127
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 promote incentives for
whistle-blowing insiders and prevent opportunistic
successive plaintiffs.
Id. at 1187.
We reasoned that the subsequent dismissal of Schumer’s
complaint 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-to-file
rule. Accordingly, we . . . hold that Schumer was a ‘pending
action’ under § 3730(b)(5).” Id. at 1188.
However, Lujan is distinguishable from the action before
us because Schumer’s action was subsequently dismissed on
the merits. Lujan did not argue that her action should proceed
because Schumer was not an original source. Id. at 1187. As
a result, we do not believe the reasoning behind Lujan extends
to a situation not presented in that case, where the first com-
plaint filed does not fulfill the jurisdictional prerequisites
established by 31 U.S.C. § 3730(e).
[4] The Lujan court reasoned that where two subsequent
suits raised essentially the same claims, permitting the second
suit to go forward was not necessary to alert the government
to the underlying facts of a fraudulent scheme. However, in
a public disclosure case, the government has already been
alerted to the essential facts of the fraudulent scheme when
the information was publicly disclosed under 31 U.S.C.
§ 3730(e)(4)(A).1 A non-original source does not contribute to
1
After Lujan filed her qui tam suit under seal, the Los Angeles Times
ran two articles about her claims. Lujan, 243 F.3d at 1184-85. However,
11128 CAMPBELL v. UNITED STATES
the government’s knowledge. An original source, on the other
hand, “must have had a hand in the public disclosure” which
alerted the government to the essential facts of the fraudulent
scheme. Wang, 975 F.2d at 1418. Because original sources
are still permitted to bring a qui tam complaint after public
disclosure, Congress clearly believed that original sources
possessed valuable information that would assist the govern-
ment in prosecution of false claims actions. See, e.g., United
States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v.
Prudential Ins. Co., 944 F.2d 1149, 1154 (3d Cir. 1991)
(“One theme recurring through the legislative history . . . is
the intent to encourage persons with first-hand knowledge of
fraudulent misconduct to report fraud.”). Congress also
sought to reward whistleblowers who had disclosed informa-
tion to the government before public disclosure of the allega-
tions. See, e.g., United States ex rel. Biddle v. Bd. of Trs. of
the Leland Stanford, Jr. Univ., 161 F.3d 533, 539 (9th Cir.
1998). Therefore, the justification for barring Lujan’s claim
does not extend to the situation before us because a pending
action filed by a non-original source does not “alert[ ] the
government to the essential facts of a fraudulent scheme.”
Compare Lujan, 243 F.3d at 1188.
2. Legislative History and Underlying Purpose of the
False Claims Act
Upon determining that Lujan is not dispositive of the case
at hand, we consider the plain language of § 3730(b)(5) and
find that it also does not resolve the question of whether the
first-to-file bar operates independently of § 3730(e)(4).
Although “pending action” could be read to include any
action filed, even if jurisdictionally flawed, it could also be
read as only encompassing an action that will proceed on the
the court did not reach the issue of whether this constituted a public dis-
closure because Lujan’s suit, filed before the articles were run, could not
be said to be “based upon them.” 31 U.S.C. § 3730(e)(4)(A).
CAMPBELL v. UNITED STATES 11129
merits, such as Schumer’s action. Because we cannot deter-
mine how § 3730(b)(5) applies to the situation before us on
the basis of the plain language alone, we consider the legisla-
tive history of the 1986 Amendments and the history of the
FCA to ascertain the congressional intent in enacting the pro-
vision. See United States v. Daas, 198 F.3d 1167, 1174 (9th
Cir. 1999).
The Senate Report to the 1986 Amendments to the FCA,
the most recent version of the statute, notes that, “[t]he Com-
mittee’s overall intent in amending the qui tam section of the
False Claims Act is to encourage more private enforcement
suits.” S. REP. NO. 99-345, at 23-24 (1986), reprinted in 1986
U.S.C.C.A.N. 5266, 5288-89. The note to subsection (b)(5)
simply states that the provision
further clarifies that only the Government may inter-
vene in a qui tam action. While there are few known
instances of multiple parties intervening in past qui
tam cases, the Committee wishes to clarify in the
statute that private enforcement under the civil False
Claims Act is not meant to produce class actions or
multiple separate suits based on identical facts and
circumstances.
Id. at 25 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5290
(internal citation omitted). The legislative history also does
not resolve the dispute before us, although the congressional
intent to encourage whistleblowers to come forward is clear.
Because that example is not instructive with respect to the
case before us, we consider the history of the FCA.
The FCA was originally enacted in 1863 to address fraud
by defense contractors during the civil war. Stinson, 944 F.2d
at 1153. Congress amended the FCA in 1943 in response to
a Supreme Court decision that permitted a qui tam plaintiff to
recover even though he had copied his allegations from the
government’s criminal indictment and contributed no original
11130 CAMPBELL v. UNITED STATES
information to the government’s suit. Id. In amending the Act,
Congress sought to exclude “parasitical suits” where the gov-
ernment already possessed the information underlying the
complaint. United States ex rel. Hagood v. Sonoma County
Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991). How-
ever, courts read the 1943 amendments as foreclosing all qui
tam suits where the government already possessed informa-
tion about the allegations of fraud, even where the relator had
independently discovered information about the fraud and
conveyed it to the government. Wang, 975 F.2d at 1419; S.
REP. NO. 99-345, at 12 (1986), reprinted in 1986
U.S.C.C.A.N. 5266, 5277. Congress, in response, amended
the statute again in 1986. Wang, 975 F.2d at 1419. “[T]he pur-
pose of the 1986 amendments was to repeal overly-restrictive
court interpretations of the qui tam statute, which had prohib-
ited not only suits by private citizens based on information
obtained by the government, but also suits brought by those
who had information independently of the government.”
Hagood, 929 F.2d at 1420. The 1986 Amendments also
sought to “encourage more private enforcement suits.” Stin-
son, 944 F.2d at 1154 (internal quotation marks omitted) (not-
ing other provisions to encourage qui tam suits, including
increased monetary awards and a lower burden of proof).
3. Section 3730(b)(5) Does Not Create an Absolute
First-to-File Bar When the First Complaint is
Jurisdictionally Defective
Both the history of the FCA and the legislative history of
the 1986 Amendments demonstrate the effort to achieve “the
golden mean between adequate incentives for whistle-blowing
insiders with genuinely valuable information and discourage-
ment of opportunistic plaintiffs who have no significant infor-
mation to contribute of their own.” Devlin, 84 F.3d at 362
(internal quotation marks omitted); see also United States ex
rel. LaCorte v. Smithkline Beecham Clinical Labs., Inc., 149
F.3d 227, 233 (3d Cir. 1998) (“Section 3730 attempts to rec-
oncile two conflicting goals, specifically, preventing opportu-
CAMPBELL v. UNITED STATES 11131
nistic suits, on the one hand, while encouraging citizens to act
as whistleblowers, on the other.”); Grynberg v. Koch Gateway
Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004) (“The
False Claims Act’s qui tam provisions are designed to encour-
age private citizens to expose fraud but to avoid actions by
opportunists seeking to capitalize on public information.”).
Even where allegations have already been publicly dis-
closed, the original source requirement seeks to reward those
who came to the government with information about fraud
before the public disclosure. Biddle, 161 F.3d at 539.
[5] The FCA reflects the strong congressional policy of
encouraging whistleblowers to come forward by rewarding
the first to do so. See, e.g., id. (“Insiders who have no duty to
disclose fraud, i.e., who do so voluntarily, should be encour-
aged to take ‘significant personal risks to bring such wrong-
doing to light,’ and should be rewarded for doing so.”). In
amending the FCA, Congress sought to create incentives for
insiders with information that would be particularly valuable
to the government. Devlin, 84 F.3d at 361-62; see also Minn.
Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276
F.3d 1032, 1046 n.10 (8th Cir. 2002) (“Congress’s view of
what a relator deserves to recover is plainly affected by the
utility of the information to the government.”). Section
3730(e)(4) attempts to balance the goals of “avoidance of par-
asitism and encouragement of legitimate citizen enforcement
actions.” Kennard v. Comstock Resources, Inc., 363 F.3d
1039, 1042 (10th Cir. 2004) (quoting United States ex rel.
Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 651
(D.C. Cir. 1994)).
[6] Construing § 3730(b)(5) to create an absolute bar would
permit opportunistic plaintiffs with no inside information to
displace actual insiders with knowledge of the fraud. The gov-
ernment conceded at oral argument that under its interpreta-
tion of § 3730(b)(5), a purely frivolous sham complaint filed
in an instance where the allegations had been publicly dis-
11132 CAMPBELL v. UNITED STATES
closed would bar a subsequently filed action by an original
source. This cannot be what Congress intended. We have pre-
viously noted that, “[i]n earlier versions of the FCA, the stat-
ute was abused by qui tam suits brought by private plaintiffs
who had no independent knowledge of fraud.” Seal 1 v. Seal
A, 255 F.3d 1154, 1158 (9th Cir. 2001). Although the addition
of § 3730(e)(4) would now prevent these plaintiffs from
recovering in a public disclosure case, the simple fact that the
sham complaint was filed before a meritorious complaint
brought by a real original source would effectively prevent
anyone from bringing a qui tam suit related to those claims.
Such an interpretation would have the effect of reducing the
number of qui tam suits in public disclosure cases, directly
contravening the express intent of Congress. See United
States ex rel. Fine v. Chevron, U.S.A., Inc., 72 F.3d 740, 744
n.4 (9th Cir. 1995) (en banc) (“We have in the past relied on
common-sense definitions to parse the terms of the qui tam
provisions.”).
The government responds to Campbell’s argument that an
absolute first-to-file rule would permit displacement of real
whistleblowers by sham complaints by stating that such a sit-
uation would be prevented by FED. R. CIV. P. 9(b). However,
although FED. R. CIV. P. 9(b) requires qui tam plaintiffs to
plead fraud with particularity, this inquiry is separate from the
original source inquiry under § 3730(e)(4). As a result, the
government’s argument does not adequately respond to
Campbell’s point that a placeholder complaint filed by a non-
original source could divest the court of jurisdiction over a
complaint appropriately filed by an original source, thereby
thwarting the intent of Congress.
[7] To summarize: In dismissing Campbell’s complaint
under FED. R. CIV. P. 12(h)(3), the district court read Lujan to
mean that § 3730(b)(5) bars a subsequent qui tam complaint
even if the first complaint was itself jurisdictionally barred.
However, the district court applied Lujan to a situation that
was not before the Lujan court. To clarify the application of
CAMPBELL v. UNITED STATES 11133
Lujan to the circumstances before us, we hold that in a public
disclosure case, the first-to-file rule of § 3730(b)(5) bars only
subsequent complaints filed after a complaint that fulfills the
jurisdictional prerequisites of § 3730(e)(4).
[8] As noted previously, the district court assumed for pur-
poses of the motion to dismiss that Corapi and Zerga were not
original sources, ruling that all that matters was whether
Corapi and Zerga were the first to file. As we have shown,
that is not all that matters. Accordingly, we remand so that the
district court can determine if Corapi and Zerga were, indeed,
original sources. If they were, their first-filed complaint dis-
qualifies Campbell’s. If they were not, the court has no juris-
diction over their complaint and Campbell would not be
barred from filing his action. As a practical matter, there is
almost no way that this determination can be made unless
both the Corapi/Zerga and Campbell cases are consolidated,
and we therefore direct the court to consider doing so after
notice to all affected parties.
REVERSED AND REMANDED.