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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 20-14109
____________________
SHELDON CHO,
MD, Relators and on behalf of the States of Florida,
Colorado, Georgia, North Carolina and Texas,
DAWN BAKER,
Relators and on behalf of the States of Florida,
Colorado, Georgia, North Carolina and Texas,
Plaintiffs-Appellants-
Cross Appellees,
versus
SURGERY PARTNERS, INC., et al.,
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2 Opinion of the Court 20-14109
Defendants,
H.I.G. CAPITAL, LLC,
H.I.G. SURGERY CENTERS, LLC,
Defendants-Appellees-
Cross Appellants.
____________________
Appeals from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:17-cv-00983-VMC-AEP
____________________
Before WILSON, LAGOA, Circuit Judges, and MARTINEZ*, District
Judge.
WILSON, Circuit Judge:
The False Claims Act (FCA) allows private parties, known as
qui tam relators, to bring suit on behalf of the United States against
persons who submitted false claims to the government. In this
case, Dawn Baker and Dr. Sheldon Cho (the Relators) allege that
H.I.G. Capital, LLC and H.I.G. Surgery Centers, LLC (collectively,
*Honorable Jose E. Martinez, United States District Judge for the Southern
District of Florida, sitting by designation.
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20-14109 Opinion of the Court 3
H.I.G. or the H.I.G. entities) spearheaded a fraudulent enterprise
to submit false claims for reimbursement to Medicare and other
government payors. The district court dismissed the claim without
prejudice under the FCA’s first-to-file bar, which prohibits relators
from bringing a qui tam action while a related action is pending.
On appeal, the Relators argue that the district court’s first-to-file
analysis was flawed because (1) it should have focused on the mo-
ment at which they filed their amended complaint rather than their
original complaint, and (2) the earlier-filed action the district court
relied on is unrelated to this suit. On cross-appeal, H.I.G. argues
that we should convert the district court’s dismissal without preju-
dice to a dismissal with prejudice for failure to state a claim and for
failure to meet the heightened pleading standard required for alle-
gations of fraud—grounds the district court did not address below.
After careful review and with the benefit of oral argument,
we hold, first, that the FCA’s plain language makes the original
complaint—not the amended complaint—the proper point of ref-
erence for the first-to-file analysis. Second, we hold that this action
is related to an earlier-filed action that alleged the same material
elements of fraud. Therefore, we affirm the district court’s dismis-
sal of the complaint without prejudice pursuant to the first-to-file
bar. Finally, we deny H.I.G.’s cross-appeal. Even assuming we
could enlarge H.I.G.’s relief based on grounds the district court did
not reach, we decline to do so.
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4 Opinion of the Court 20-14109
I.
We begin with an overview of the facts and procedural back-
ground of this case. Because this is an appeal from a motion to
dismiss, we take as true the facts pleaded in the complaint and con-
strue them in the light most favorable to the Relators. Belanger v.
Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009).
In 2009, H.I.G., an international private equity firm, pur-
chased Surgery Partners, Inc., along with its subsidiaries and affili-
ates (collectively, Surgery Partners). Surgery Partners owned and
operated a network of surgery and pain-management centers. At
the time of the acquisition, an H.I.G. affiliate entered into a man-
agement contract with Surgery Partners, giving H.I.G. control over
Surgery Partners’ operation. Shortly thereafter, H.I.G. placed
three of its representatives on Surgery Partners’ Board of Directors.
In 2011, H.I.G. and Surgery Partners formed a diagnostic testing
business called Logan Laboratories, LLC (Logan Labs), which spe-
cialized in urine drug testing (UDT).
There are two types of UDT: qualitative, which can detect
the presence of drugs in a patient’s system, and quantitative, which
can detect how much of a drug is in a patient’s system. While quan-
titative UDT has the advantage of providing more information, it
is often not medically necessary. And because it must be per-
formed in a laboratory, by laboratory professionals, it is more ex-
pensive than qualitative UDT.
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The Relators allege that Surgery Partners—under H.I.G.’s
guidance—consistently and routinely pressured its medical provid-
ers to refer patients to Logan Labs for quantitative UDT, regardless
of whether qualitative UDT, the cheaper option, would have been
sufficient. Making matters worse, the Relators say, Logan Labs
would run excessive UDT panels, thus further increasing costs.
Based on these UDT panels, Logan Labs then submitted claims for
reimbursement to government healthcare programs, generating
millions of dollars in payments. The Relators allege that H.I.G.
caused this fraudulent overbilling, evidenced by the fact that it con-
trolled Surgery Partners and Logan Labs during the relevant time
period. Several H.I.G. executives who sat on Surgery Partners’
Board of Directors allegedly furthered the fraud by manipulating
Surgery Partners’ electronic medical records (EMR) software to
justify unnecessary UDT.
In April 2017, the Relators—a pain management specialist
and a physician recruiter—filed a complaint under the FCA and
several state fraud statutes alleging that dozens of defendants had
engaged in a fraudulent scheme. The Relators amended their com-
plaint as of right in January 2019. A year later, the United States
intervened as to some defendants named in the action, but declined
to intervene as to H.I.G.
Importantly, however, a separate group of relators had also
filed an FCA action (hereinafter, the Ashton Action) under seal
against Surgery Partners and Logan Labs in connection with the
same fraudulent scheme, though they did not name the H.I.G.
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entities as defendants. See United States ex rel. Ashton v. Logan
Laboratories, LLC, et al., Case No. 16-4583 (E.D. Pa. 2016). The
Ashton Action was filed in August 2016—eight months before the
Relators filed their initial complaint. The United States eventually
intervened in the Ashton Action and reached a $41 million settle-
ment agreement with four defendants, the Relators in this case, and
the Ashton relators. The settlement agreement, announced in
April 2020, contained a general release of FCA liability for Logan
Labs’ “current and former direct and indirect[ ] parent corporations
. . . [and] corporate owners” based on the conduct described in the
agreement. And specifically as to H.I.G., the agreement included
a release of “liability against the H.I.G. Entities . . . for their own
independent conduct outside their status as investors in or owners
of” Logan Labs. The Ashton Action was then unsealed, and the
settlement agreement became public.
Subsequently, the Relators in this case filed a second
amended complaint narrowing their allegations to focus on
H.I.G.’s conduct. The second amended complaint brought causes
of action against the H.I.G. entities for violation of the FCA, 31
U.S.C. § 3729(a)(1)(A) and (B), and for conspiracy to violate the
FCA, 31 U.S.C. § 3729(a)(1)(C). H.I.G. moved for dismissal on sev-
eral grounds, including that (1) the FCA’s first-to-file rule barred
the claim; (2) the Relators failed to state a claim because they did
not sufficiently allege that H.I.G. knowingly caused the submission
of false claims; (3) the Relators failed to plead fraud with
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particularity; and (4) the settlement agreement released H.I.G.
from any liability.
The district court granted the motion, finding that the sec-
ond amended complaint was barred by the FCA’s first-to-file rule.
Although the Relators filed the second amended complaint at a
time when the Ashton Action was no longer pending, the district
court held that the relevant question was whether the Ashton Ac-
tion was pending at the time the Relators filed their initial com-
plaint. Because the Ashton Action was pending at that time, the
district court concluded that it barred the Relators’ action so long
as the two actions were related. The district court held next that
the two actions were related because “they allege the same essen-
tial facts regarding the UDT fraud against the Government com-
mitted by Surgery Partners and Logan Labs.” Accordingly, the dis-
trict court dismissed the claim without prejudice. 1 The Relators
appealed the district court’s grant of the motion to dismiss.
II.
We review de novo a district court’s grant of a motion to
dismiss. Wiersum v. U.S. Bank, N.A., 785 F.3d 483, 485 (11th Cir.
2015). Likewise, we review de novo a district court’s interpretation
of a statute. Id.
1Because the first-to-file bar precluded the Relators’ suit, the district court did
not address H.I.G.’s remaining arguments.
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8 Opinion of the Court 20-14109
III.
We split our discussion into two parts. First, we address
whether the FCA bars a complaint that is (a) filed while a related
action is pending, but (b) amended after the related action is dis-
missed. Second, we determine the proper standard for analyzing
whether a claim is related to a previously-filed action, and we apply
that standard to the facts before us.
A.
The Relators’ first argument on appeal is that the FCA’s first-
to-file bar is inapplicable because the Ashton Action was no longer
pending at the time the Relators filed the second amended com-
plaint. Under the first-to-file bar, “[w]hen a person brings an action
under [the FCA], no person other than the Government may inter-
vene or bring a related action based on the facts underlying the
pending action.” 31 U.S.C. § 3730(b)(5). As other courts have ob-
served, the first-to-file bar serves two related purposes: “to elimi-
nate parasitic plaintiffs who piggyback off the claims of a prior re-
lator, and to encourage legitimate relators to file quickly by pro-
tecting the spoils of the first to bring a claim.” In re Nat. Gas Roy-
alties Qui Tam Litig. (CO2 Appeals), 566 F.3d 956, 961 (10th Cir.
2009); see also United States ex rel. Wood v. Allergan, Inc., 899 F.3d
163, 169–70 (2d Cir. 2018).
Here, there is no dispute that the Ashton Action was still
pending when the Relators filed their original complaint. But
when the Relators filed their second amended complaint, the
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Ashton Action had settled, and therefore was no longer “pending.”
See Kellogg Brown & Root Servs., Inc. v. United States, ex rel.
Carter, 575 U.S. 650, 664 (2015). The core issue, then, is whether it
is the filing of a relator’s original complaint or his amended com-
plaint that informs our analysis of the first-to-file bar. Or, to frame
the question another way: Can a first-to-file defect be cured by the
filing of an amended complaint?2
We begin our analysis, as always, with the statutory text. In
this case, it happens to be fairly straightforward: a person may not
“bring a related action” while the first-filed action is pending. 31
U.S.C. § 3730(b)(5). We have held several times that the key
phrase—to “bring” an “action”—“has a settled customary meaning
at law, and refers to the initiation of legal proceedings in a suit.”
Harris v. Garner, 216 F.3d 970, 973 (11th Cir. 2000) (en banc) (quot-
ing Black’s Law Dictionary 192 (6th ed. 1990)). Absent any indica-
tion to the contrary, “we readily presume that Congress knows the
settled legal definition of the words it uses, and uses them in the
settled sense.” Id. at 974.
Applying that settled definition here, the statutory prohibi-
tion turns on the moment the Relators initiated legal
2 We note that, in any event, the first-to-file bar will not prevent relators from
bringing a new action once the earlier-filed action is no longer pending. How-
ever, other barriers such as the statute of limitations may present an obstacle
in that scenario. See United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163,
174 (2d Cir. 2018); United States ex rel. Shea v. Cellco P’ship, 863 F.3d 923, 932
(D.C. Cir. 2017).
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10 Opinion of the Court 20-14109
proceedings—not on the moment the Relators amended their
complaint. As other circuits have recognized, “an amended . . .
pleading cannot change the fact that [the relator] brought an action
while another related action was pending.” 3 Wood, 899 F.3d at 172
(citing United States ex rel. Shea v. Cellco P’ship, 863 F.3d 923 (D.C.
Cir. 2017)). Here, the Relators brought this suit while the Ashton
Action was pending. Therefore, we hold that the first-to-file bar
applies.
The Relators offer two counterarguments. First, they argue
that the purpose of the FCA is to encourage more private enforce-
ment, and that we should interpret the first-to-file bar narrowly in
furtherance of that purpose. As we have explained, however, “[w]e
interpret and apply statutes, not congressional purposes.” In re
Hedrick, 524 F.3d 1175, 1188 (11th Cir. 2008). And in any event,
the FCA does not pursue a singular purpose. It pursues the “twin
goals” of rewarding whistleblowers for bringing fraud to the
3Nearly every circuit to consider the issue has endorsed this reasoning. See
United States ex rel. Carter v. Halliburton Co., 866 F.3d 199, 206–07 (4th Cir.
2017); Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 n.5 (6th Cir.
2005); United States ex rel. Chovanec v. Apria Healthcare Grp. Inc., 606 F.3d
361, 362 (7th Cir. 2010); United States ex rel. Lujan v. Hughes Aircraft Co., 243
F.3d 1181, 1188 (9th Cir. 2001); Grynberg v. Koch Gateway Pipeline Co., 390
F.3d 1276, 1279 (10th Cir. 2004).
Though we acknowledge that the First Circuit reached the contrary conclu-
sion, it did not explain how its reading comports with the plain language of
the first-to-file bar. See United States ex rel. Gadbois v. PharMerica Corp., 809
F.3d 1, 3–4 (1st Cir. 2015). Therefore, we find that decision unpersuasive.
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government’s attention, while seeking to discourage opportunists
who would enrich themselves by pursuing fraud the government
already knows about. See United States ex rel. Springfield Termi-
nal Ry. v. Quinn, 14 F.3d 645, 649–51 (D.C. Cir. 1994). How best
to mediate those competing interests is for Congress to decide, and
Congress has spoken clearly here.
Second, the Relators argue that their interpretation of the
first-to-file bar finds support in Supreme Court precedent and our
own precedent. At the Supreme Court level, the Relators point to
Rockwell International Corp. v. United States, 549 U.S. 457 (2007),
a case that involved the FCA’s public-disclosure bar and its original-
source exception. Under the then-applicable version of the statute,
courts lacked jurisdiction over qui tam suits that were “based upon
the public disclosure of allegations or transactions ‘unless . . . the
person bringing the action [was] an original source of the infor-
mation.’” Id. at 460 (quoting 31 U.S.C. § 3730(e)(4)(A) (1994)).
The relator in Rockwell amended his complaint but asked the
Court to consider only his initial complaint in determining whether
he was an original source. Id. at 473. The Supreme Court rejected
that argument, holding that the word “allegations,” as used in the
public-disclosure bar, “includes (at a minimum) the allegations in
the original complaint as amended.” Id. (emphasis in original).
The Court emphasized that a “demonstration that the original al-
legations were false will defeat jurisdiction.” Id.
What we can take from Rockwell is that where the analysis
turns on the substance of a relator’s allegations in the public-
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disclosure context, courts cannot ignore new, relevant allegations
that reveal a jurisdictional defect. But the crux of the issue here is
timing. The temporal question of when an action was brought
(i.e., filed) remains unaffected by whatever new allegations a rela-
tor brings forward. See Wood, 899 F.3d at 172. Therefore, Rock-
well does not help the Relators.
As to our own precedent, the Relators cite to Makro Capital
of America, Inc. v. UBS AG, 543 F.3d 1254 (11th Cir. 2008), but that
decision too is distinguishable. In Makro, the original complaint
was not a qui tam action under the FCA; it alleged non-FCA fraud
and tort claims. Id. at 1256. After the plaintiff amended its com-
plaint, restyling it as an FCA qui tam action, the district court
granted dismissal based on the then-applicable government
knowledge bar, 31 U.S.C. § 3730(b)(4) (1982) (repealed 1986), find-
ing that the suit was based on information that was publicly avail-
able at the time of the amended complaint. Makro, 543 F.3d at
1256–57. On appeal, we agreed that the filing of the amended com-
plaint was the proper reference point—but only because the origi-
nal complaint had not been a qui tam action. Id. at 1259. We
stressed the “disjunction” between the plaintiff’s “original claim
seeking personal recovery for fraud (and other torts),” and “its qui
tam claim seeking recovery for fraud committed against the United
States.” Id. at 1259–60. Without that sort of disjunction here, our
holding that the Relators first brought an FCA action when they
filed their original complaint is not in tension with Makro.
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20-14109 Opinion of the Court 13
As a result, we conclude that the FCA’s plain text tethers our
analysis to the moment a qui tam action is filed. When the Relators
filed this qui tam suit, the Ashton Action was pending. Therefore,
the Relators cannot evade the first-to-file bar by amending their
pleading after the Ashton Action was dismissed.
B.
Having determined that the first-to-file bar applies to the fil-
ing of the original complaint, we now address the Relators’ argu-
ment that, in any event, their complaint is unrelated to the Ashton
Action.
We have not yet adopted a test for determining whether
two qui tam actions are related. Both parties suggest that we fol-
low our sister circuits in adopting the “same material elements”
test, also called the “same essential elements” test, which the dis-
trict court applied below. See United States ex rel. Chovanec v.
Apria Healthcare Grp. Inc., 606 F.3d 361, 363 (7th Cir. 2010) (col-
lecting cases). Under this test, two actions are related if they “in-
corporate ‘the same material elements of fraud.’” Wood, 899 F.3d
at 169. That is, “to be related, the cases must rely on the same ‘es-
sential facts.’” Id. In applying this test, several circuits have com-
pared the two complaints “side-by-side” and asked “whether the
later complaint ‘alleges a fraudulent scheme the government al-
ready would be equipped to investigate based on the first com-
plaint.’” United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112,
121 (D.C. Cir. 2015) (alterations adopted); see also Wood, 899 F.3d
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14 Opinion of the Court 20-14109
at 169; United States ex rel. Carson v. Manor Care, Inc., 851 F.3d
293, 303 (4th Cir. 2017).
As these courts have emphasized, this test finds support in
the text of the FCA. Under 31 U.S.C. § 3730(b)(5), the first-filed and
later-filed claims need not be identical; they need only be “related.”
Drawing upon this distinction, the same material elements test cre-
ates a framework under which § 3730(b)(5) can still bar a later
claim, “even if the allegations ‘incorporate somewhat different de-
tails.’” Heath, 791 F.3d at 116. Finding that this test aligns with the
FCA’s plain text, we adopt it here.
Our next task is to determine whether the district court cor-
rectly applied this test to conclude that the Relators’ original com-
plaint alleged the same essential facts as did the original complaint
in the Ashton Action, which was pending at the time. 4 The Rela-
tors contend that it did not for two reasons. First, the Relators
named the H.I.G. entities as defendants, whereas the Ashton Ac-
tion did not. Second, in addition to the Relators’ substantive FCA
claim, they alleged a conspiracy, which the Ashton relators did not
allege.
4 We compare the Ashton complaint to the Relators’ original complaint for
the reasons we outlined above. But in any event, it does not appear that it
would make any difference if we looked to the substance of the second
amended complaint, as the Relators concede that the allegations set forth in
their initial and second amended complaints are “virtually identical.”
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Beginning with the Relators’ first contention, we disagree
that the first-to-file bar requires a necessarily defendant-specific ap-
proach. Though we have no binding precedent on point, we find
instructive the view of our sister circuits that adding a new defend-
ant to the mix does not necessarily allow a later-filed action to
evade the first-to-file bar, particularly where the new defendant is
a corporate relative or affiliate of the earlier-named defendants.
See, e.g., Nat. Gas Royalties, 566 F.3d at 962; United States ex rel.
Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214, 218
(D.C. Cir. 2003). What we must determine is whether the addition
of a new defendant put the government on notice of a broader,
more pervasive, or distinct scheme. Two cases from the D.C. Cir-
cuit, Hampton and Heath, serve as useful bookends for this analy-
sis.
In Hampton, the earlier-filed action was brought against one
corporate entity, HCA, alleging a “corporate-wide” fraudulent
scheme that HCA carried out through its subsidiaries in thirty-
seven states. 318 F.3d at 218. A later-filed action alleged that an
additional HCA subsidiary perpetrated the same fraudulent
scheme in six other states. Id. The court held that merely adding
another corporate subsidiary did not amount to a difference in the
material elements of the alleged fraud. Id. Therefore, the later-
filed action was barred. At the other end of the spectrum is Heath.
In that case, the earlier-filed action alleged that Wisconsin Bell, Inc.,
a subsidiary of AT&T, Inc., engaged in a scheme to defraud the
government. Heath, 791 F.3d at 118. That scheme, according to
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the earlier-filed action, was “limited” in scope and did not extend
beyond Wisconsin. Id. at 121–122. The later-filed action, in con-
trast, “allege[d] a different and more far-reaching scheme to de-
fraud the federal government through service contracts entered
into across the Nation.” Id. at 121. On these facts, the court held
that the later-filed action alleged different material elements of
fraud. Id. at 122–23.
These cases help illustrate that there is no bright-line rule as
to whether naming an additional defendant states a different essen-
tial claim. We must determine whether the introduction of a new
defendant amounts to allegations of a “different” or “more far-
reaching scheme” than was alleged in the earlier-filed action. See
id.
The Relators argue that their allegations are indeed broader
than those in the Ashton Action. Specifically, they argue that their
complaint puts the government on notice that the scheme “in-
volved a unique breed of healthcare fraud, designed and directed
by outside capital.” But when comparing the Relators’ complaint
side-by-side with the Ashton complaint, the Relators’ allegations do
not meaningfully expand the scope of the UDT scheme or suggest
that it was more pervasive than the Ashton Action indicated. 5 See
id. Both complaints allege that: (1) Surgery Partners and Logan
5The district court properly took judicial notice of the Ashton complaint,
which is publicly available, to establish the content of those allegations. See
Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1277 (11th Cir. 1999).
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20-14109 Opinion of the Court 17
Labs were engaged in a scheme to order expensive and unneces-
sary quantitative UDT panels for patients at Logan Labs; (2) Sur-
gery Partners paid kickbacks to physicians and pain management
specialists to entice them to refer patients to Logan Labs for UDT;
(3) Surgery Partners’ EMR software was manipulated to support
orders for unnecessary UDT; (4) Logan Labs ran these UDT panels;
and (5) this scheme caused Logan Labs to submit millions of dol-
lars’ worth of fraudulent claims for reimbursement to government
healthcare programs.
Taken as a whole, both complaints allege the same essential
UDT scheme carried out by Surgery Partners and Logan Labs.
Based on the Ashton Action, the government was already alerted
to that scheme, and would have been equipped to investigate
whether any corporate affiliates or investors connected to Surgery
Partners and Logan Labs were participants. The Relators did not
allege different material facts by naming H.I.G. as a defendant with-
out making any allegations that would meaningfully magnify the
scope or pervasiveness of the scheme.
In urging that we reach the contrary conclusion, the Rela-
tors analogize a case in the public-disclosure context: Cooper v.
Blue Cross & Blue Shield of Florida, Inc., 19 F.3d 562 (11th Cir.
1994) (per curiam). In Cooper, the question was whether public
disclosure of industry-wide insurance fraud, as well as allegations
against Blue Cross Blue Shield of Georgia (BCBSG) amounted to
public disclosure of fraud by BCBSG’s sister corporation—Blue
Cross Blue Shield of Florida. Id. at 566–67. We held that it did not,
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18 Opinion of the Court 20-14109
reasoning in part that “[r]equiring that allegations specific to a par-
ticular defendant be publically disclosed before finding the action
potentially barred encourages private citizen involvement and in-
creases the chances that every instance of specific fraud will be re-
vealed.” Id. at 566.
We find, however, that Cooper is distinguishable. To be
sure, a public disclosure that one of a company’s subsidiaries en-
gaged in fraud may not alert the government to a parallel, distinct
scheme by another subsidiary. But our facts are different. A com-
parison of the two complaints at issue here belies any notion that
the Relators are alleging a fraudulent scheme distinct from the one
alleged in the Ashton Action. The Relators allege that an additional
player who was affiliated with Surgery Partners and Logan Labs
had its hands in the same fraudulent scheme. The government
would have been equipped, based on the Ashton Action, to inves-
tigate this matter. Therefore, the Relators’ claim is related to the
Ashton Action for purposes of the first-to-file bar.
Finally, the Relators’ raise a separate argument that their
FCA conspiracy claim under 31 U.S.C. § 3729(a)(1)(C) is unrelated
to the Ashton Action, which alleged only substantive FCA viola-
tions. That argument can be dealt with in short order. Because the
Relators’ conspiracy claim is based on the same fraudulent scheme
that was alleged in the Ashton Action, the government would have
been equipped to investigate both substantive FCA violations and
any conspiracies stemming from, or derivative to, the same
scheme. See Heath, 791 F.3d at 121. Therefore, the Relators’
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20-14109 Opinion of the Court 19
conspiracy claim is related to the Ashton Action and is barred by §
3730(b)(5).
IV.
In conclusion, when relators file a qui tam action that is re-
lated to an already-pending action, that claim is incurably flawed
from the moment it is filed. Here, the Relators’ claims focus on the
same fraudulent scheme at issue in the Ashton Action, which was
pending when the Relators brought this action. Therefore, the Re-
lators’ claim is barred under the FCA’s first-to-file rule. We affirm
the district court’s dismissal without prejudice.
AFFIRMED.