Fraud Whistleblowers Face Big Split Over Race to Courthouse Rule

A recent federal appeals court ruling flipping a $34M award from one whistleblower to another highlights what can be at stake under the False Claims Act’s first-to-file rule. Companies accused of fraud can raise first-to-file challenges at any time in a case, even if the case advanced to trial and is being litigated at the appeals court level.

Morrison & Foerster Government Contracts co-chair Alex Ward was quoted in Bloomberg Law’s article, saying “This is important because a defendant might not even know there is a case against. Cases can be under seal for a long time. Being able to raise a challenge at any time really does matter.”

“In nonjurisdictional circuits, you can definitely jeopardize the right to raise a first-to-file challenge if you fail to include it in the first pleading in response to a complaint,” Alex said. “It may be possible to raise a challenge later, but you certainly risk waiver. And if a case has proceeded to trial, at that point, you have definitely waived the right.”

“It’s not universally true, but generally, if you are a whistleblower trying to fend off others, you probably want to limit the scope of inquiry,” Alex said.