USA v. Community Health Systems, Inc.

Filing 184

MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge Kevin H. Sharp on 8/6/15. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(afs)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
UNITED STATES OF AMERICA,
)
ex rel. JAMES DOGHRAMJI, SHERRE )
COOK, and RACHEL BRYANT,
)
)
Plaintiffs,
)
)
v.
)
No. 3:11-00442
)
JUDGE SHARP
COMMUNITY HEALTH SYSTEMS,
)
INC., et al.
)
)
Defendants.
)
******************************************************************************
UNITED STATES OF AMERICA and )
STATE OF TEXAS ex rel.
)
AMY COOK-RESKA,
)
)
Plaintiffs,
)
)
v.
)
No. 3:14-02160
)
JUDGE SHARP
)
COMMUNITY HEALTH SYSTEMS,
)
INC., et al.
)
)
Defendants.
)
******************************************************************************
UNITED STATES OF AMERICA,
)
ex. rel KATHLEEN A. BRYANT,
)
)
Plaintiff,
)
)
)
No. 3:14-02195
v.
)
JUDGE SHARP
)
COMMUNITY HEALTH SYSTEMS,
)
INC., et al.
)
)
Defendants.
)
******************************************************************************

UNITED STATES OF AMERICA
ex rel. NANCY REUILLE,
Plaintiffs

v.
COMMUNITY HEALTH SYSTEMS,
PROFESSIONAL SERVICES, CORP.,
et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)

No. 3:15-00110
Judge Sharp

MEMORANDUM
The above-captioned cases, consolidated for purposes of the potential award of attorney’s
fees and costs, are among seven cases that were part of a $97 million-plus global settlement with the
United States relating to allegations that Community Health Systems, Inc. (“CHSI”)-affiliated
hospitals violated the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., in certain specified
particulars. On August 20, 2015, the Court heard oral arguments on Plaintiffs’ (the qui tam relators
in the underlying actions1) requests for attorney’s fees, including arguments on the threshold issue
of whether their requests for fees are barred by either the “first to file”or the “public disclosure”
provisions of the FCA. Having considered those arguments, as well as the extensive briefing on the
issue, the Court concludes that Plaintiffs’ request are not so barred. Accordingly, the Court will
return these cases to the Magistrate Judge for consideration of each Plaintiffs’ requests for attorney’s
fees and costs.
1

The four actions consolidated in this Court are: (1) United States ex rel. Reuille v. Cmty. Health
Sys. Prof’l Servs., Corp., filed in the Northern District of Indiana on Jan. 7, 2009 (“Reuille”); (2) United
States ex rel. Cook-Reska v. Cmty. Health Sys., Inc., filed in the Southern District of Texas on May 22, 2009
(“Cook-Reska”); (3) United States ex rel. Bryant v. Cmty. Health Sys., Inc., filed in the Southern District of
Texas on July 29, 2010 (“Bryant”); and United States ex rel. Serv. Emps. Int’l Union v. Cmty. Health Sys.,
Inc., filed in this Court on May 10, 2011 (“Doghramji”).

2

I.
On July 29, 2014, following a lengthy investigation by the United States, Defendants entered
into a Settlement Agreement in which CHSI and its affiliates denied wrongdoing but agreed to pay
the United States $97,257,500. That agreement resolved two claims: (1) the Government’s claim
regarding “Medically Unnecessary Emergency Department Admissions” (“the national ED claim”);
and (2) claims that the Laredo Medical Center in Texas had (a) improperly billed the government
for inpatient procedures and (b) engaged in improper financial relationships with referring
physicians in violation of the Stark Law (“the Laredo claims”). The Agreement earmarked
$88,257,500 to the national ED claim, and $9 million to the Laredo claims.
Following settlement, the United States approved payment of a relator’s share to one relator
for each claim. Dr. Scott Plantz, who had filed suit in the Northern District of Illinois on February
11, 2010 (United States ex rel. Plantz v. Health Mgmt. Assocs., Inc.) (“Plantz”), received the
relator’s share of $16,427,740.96 (exclusive of interest) for the national ED claim.

Amy

Cook-Reska, one of the relators here, received $2,141,184.04 (exclusive of interest) for her claims
against Laredo. Dr. Plantz’s share represented approximately 19% of the recovery on the national
ED claim,2 while Ms. Cook-Reska’s share represented approximately 20% of the recovery on the
Laredo claims.
In accordance with the Settlement Agreement, the government moved to unseal, intervene
in, and dismiss all seven qui tam actions. Thereafter, relators in all of the qui tam actions informed
Defendants that they intended to file fee petitions seeking attorneys’ fees and costs for work

2

According to the parties, the relators in all seven actions executed private agreements to share any
recovered proceeds from the national ED claim.

3

performed in furtherance of the national ED claim.
Defendants paid Dr, Plantz his reasonable attorney’s fees. They also agreed to pay the
reasonable attorney’s fees of relator Thomas Mason who had filed suit in the Western District of
North Carolina on April 18, 2011 (United States ex rel. Mason v. Cmty. Health Sys., Inc.)
(“Mason”). Defendants now object to paying any fees and expenses for work on the national ED
claim by the other relators, arguing that they are barred by the “first-to-file” or “public disclosure”
provisions of the FCA.
II.
Because a court must address “questions pertaining to its jurisdiction before proceeding to
the merits.” Tenet v. Doe, 544 U.S. 1, 6 n.4 (2005), the Court necessarily begins with a
jurisdictional argument raised by Plaintiffs. After all, when a court is without jurisdiction it has no
power to hear or decide the merits of the case. Himmelreich v. Fed. Bur. of Prisons, 766 F.3d 576,
579 (6th Cir. 2014).
Plaintiffs argue that “this Court has no power to turn back the clock and open settled – or
closed – matters,” and that “Defendants seek to vest the Court with jurisdiction it lacks and, in
essence ask for an advisory opinion[.]” (Docket No. 151 at 3). Leaving aside the apparent
incongruity in Plaintiffs’ invocation of this Court’s jurisdiction to secure the award of attorney’s fees
while at the same time asserting the Court lacks jurisdiction to consider Defendants’ arguments
against such an award,3 Plaintiffs’ arguments are unpersuasive.
3

In their consolidated reply brief, Plaintiffs argue that “because the scope of the Court’s jurisdiction
is defined solely by the terms of the Settlement Agreement and the various court’s orders, it makes complete
sense that the Court ‘lacks jurisdiction to apply the FCA’s first-to-file bar but . . . possesses jurisdiction to
order attorneys’ fees.’” (Docket No. 167 at 3, citation omitted). This is so, the argument continues, because
“[t]he Settlement Agreement explicitly reserves Relators’ rights to ‘assert claims Relators may have for
reasonable attorneys’ fees, expenses, and costs pursuant to 31 U.S.C. § 3730(d),’” but “the Settlement

4

In arguing against jurisdiction, Plaintiffs’ relies primarily upon the Supreme Court’s decision
in Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994), and the Sixth Circuit’s
application of that decision in Caudill v. No. Am. Media Corp., 200 F.3d 914 (6th Cir. 2000) and
McAlpin v. Lexington 76 Auto Truck Stop, 229 F.3d 491 (6th Cir. 2000), asserting those cases are
“critical to the issues before the Court.” (Docket No. 167 at 2). All three cases, however, present
factual scenarios entirely inapposite to those presented here.
Kokkonen involved a settlement agreement between an insurer and its former agent that was
arrived at during the course of trial. Subsequently, the parties executed a Stipulation and Order
under Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure, which the district judge signed.
However, “[t]he Stipulation and Order did not reserve jurisdiction in the District Court to enforce
the settlement agreement; indeed it did not so much as refer to the settlement agreement.”
Kokkonen, 511 U.S. at 377. Nevertheless, when the agent allegedly breached the agreement by
failing to return certain files, the “District Court entered an enforcement order, asserting an ‘inherent
power to do so,’” id., a conclusion that was affirmed on appeal.
The Supreme Court reversed, observing that enforcement of a settlement agreement “is more
than just a continuation or renewal of the dismissed suit, and hence requires its own basis for
jurisdiction.” Id. at 378. Regarding the assertion that the trial court had ancillary jurisdiction to
enforce the settlement agreement, the Supreme Court recognized that its precedent recognized such
jurisdiction “for two separate, though sometimes related, purposes: (1) to permit disposition by a

Agreement does not reserve Defendants’ claims that Relators’ recovery [of those items] are barred by the
first-to-file provision[.]” (Id.). As it turns out, Plaintiffs’ position is correct, but not for the reasons they assert.
Rather, to determine whether Plaintiffs are entitled to fees necessarily requires that the Court interpret the
Settlement Agreement and Orders in the consolidated cases, something which it could not do in the absence
of jurisdiction.

5

single court of claims that are, in varying respects and degrees, factually interdependent . . . , and
(2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its
authority, and effectuate its decrees[.]” Id. at 379-80 (internal citations omitted).
The first “head” of ancillary jurisdiction was not present in Kokkonen because the breach
of the agency agreement and the breach of the settlement agreement had “nothing to do with each
other; it would neither be necessary nor even particularly efficient that they adjudicated together.”
Id. at 380. The second “head” was also not present because “the only order [t]here was that the suit
be dismissed, a disposition that is in no way flouted or imperiled by the alleged breach of the
settlement agreement.” Id. With regard to the last observation, the Supreme Court went on to note:
The situation would be quite different if the parties’ obligation to comply with the
terms of the settlement agreement had been made part of the order of dismissal –
either by separate provision (such as a provision “retaining jurisdiction” over the
settlement agreement) or by incorporating the terms of the settlement agreement in
the order. In that event, a breach of the agreement would be a violation of the order,
and ancillary jurisdiction to enforce the agreement would therefore exist. That,
however, was not the case here. The judge’s mere awareness and approval of the
terms of the settlement agreement do not suffice to make them part of his order.
Id. at 382.
“Kokkonen thus establishes the straightforward principle that in order for a federal court to
retain ancillary jurisdiction to enforce a settlement agreement, the retention of that jurisdiction must
serve or connect to a prior legitimate exercise of the court’s authority.” Herrick Co. Ins. v. SCS
Comm’n, Inc., 251 F.3d 315, 327 (2nd Cir. 2001). In the absence of that connection or any indication
that a court intends to retain jurisdiction over a dispute that is dismissed pursuant to a settlement
agreement, “[t]he settlement is just another contract to be enforced in the usual way, that is, by a
fresh suit.” Jessup v. Luther 277 F.3d 926, 929 (7th Cir. 2002).
Caudill, one of the Sixth Circuit cases relied on by Plaintiffs, involved a suit by former
6

shareholders alleging the wrongful cancellation of stock in violation of an agreement that had settled
an earlier derivative action. The trial court believed that ancillary jurisdiction existed because,
unlike the dismissal order in Kokkonen that did “‘not so much as refer to the settlement agreement,’”
the dismissal order then before the court “specifically stated that ‘[p]ursuant to the terms of the
parties’ Oct. 1, 1991 settlement agreement, the Court hereby dismisses this case.’” Caudill, 200 F.3d
at 917. This conclusion, however, was inconsistent with decisions from both the Third and Eighth
Circuit (In re Phar–Mor, Inc. Sec. Litig., 172 F.3d 270, 274 (3rd Cir. 1999) and Miener v. Mo. Dep’t
of Mental Health, 62 F.3d 1126, 1128 (8th Cir. 1995)) that had concluded that the phrase “‘pursuant
to the terms of the Settlement’ fails to incorporate the terms of the Settlement agreement into the
order’” for purposes of ancillary jurisdiction.

Caudill 200 F.3d at 917 (citation omitted).

“[E]lect[ing] to adopt the Third and Eighth Circuits’ interpretation of Kokkonen,” the Sixth Circuit
vacated the trial court’s decision for lack of jurisdiction. Id.
McAlpin, the other Sixth Circuit case relied on by Plaintiffs, involved a finding of contempt
based upon the alleged violation of a settlement agreement after the case had been dismissed and
“stricken” from the docket. Under the Agreed Order of Dismissal With Prejudice, however, “the
district court did not expressly retain jurisdiction over the Settlement Agreement, nor order [the
alleged contemnor] to take any action[.]” 229 F.3d at 491. After reviewing Kokkonen and its prior
decision in Caudill, the Sixth Circuit held that “[b]ecause this court has joined other circuits in
strictly applying Kokkonen’s relatively narrow interpretation of a district court’s ancillary
jurisdiction to enforce settlement agreements terminating litigation, the district court’s incorporation
in its dismissal order of only a single term of the parties’ 20–page settlement agreement [wa]s
insufficient to support the court’s exercise of ancillary jurisdiction over the entire agreement,” nor

7

over the actions of the alleged contemnor since the reserved “term d[i]d not, on its face, apply
directly to” her. Id. at 502.
The language in the Settlement Agreement settling the qui tam actions in these case is
entirely different than it was in Kokkenen, McAlpin, or Caudill because it specifically contemplated
that this Court, if necessary, could construe and apply its provisions, by providing that “[t]he
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States
District Court for the Middle District of Tennessee, Nashville Division[.]” (Docket No. 75-1 at 16).
While that choice-of-forum clause specifically excepted “any disputes between CHS and any
particular relator arising from that relator’s request for attorneys’ fees pursuant to 31 U.S.C. §
3730(d) or any claims Relators have under 31 U.S .C. § 3730(h),” id. that apparently was because
all but one of these actions was then pending in another federal district court. Regardless, this
Court’s Order and those of the transferor courts all contemplated that the issue surrounding
attorney’s fees would, in fact, be addressed by a court.
This Court’s Revised Order of Dismissal in Doghramji specifically stated that “[t]he Court
will retain jurisdiction over the United States, all defendants, and Relator to the extent necessary to
enforce the terms and conditions of the Settlement Agreement, and to adjudicate Relator’s claims
for statutory attorneys’ fees and costs pursuant to 31 U.S.C. § 3730(d).” (Docket No. 104). In
Bryant, Judge Werlein of the Southern District of Texas entered an Order of dismissal pursuant to
Rule 41(a)(1)(A) of the Federal Rules of Civil Procedure, but in doing so specifically stated that
“[t]he Court will retain jurisdiction . . . to adjudicate Relator’s claims . . . for statutory attorney’s fees
and costs pursuant to 31 U.S.C. § 3730(d),” and later entered an Order of Partial Transfer that
transferred relator’s request for attorney’s fees to this court. (Case No. 14-07219, Docket No. 41

8

at 2 & Docket No. 49 at 3). Similarly in Cook-Reska, Judge Lake, also of the Southern District of
Texas, entered a Final Judgment approving the Settlement Agreement but, in doing so, specifically
stated that “[t]he court will retain jurisdiction over [all parties] to the extent necessary to enforce the
terms and conditions of the Settlement Agreement, ” (Docket No. 172-3 at 2) before transferring
the request for attorney’s fees relating to the improper billing of ED admissions to this Court.
Finally, in Reuille, Judge Lozano of the Northern District of Indiana entered an Order that approved
the settlement and dismissed the action with prejudice, but “retain[ed] jurisdiction to . . . the extent
necessary to enforce the terms and conditions of the Settlement Agreement, and to adjudicate
Relator’s claims for statutory and attorney’s fees and costs pursuant to 31 U.S.C. § 3730(d),” before
the case was transferred to this Court.
Unlike Kokkenan which did not reference the underlying settlement agreement, Caudill
which merely dismissed the action pursuant to the parties’ agreement, or even McAlpin which
incorporated one irrelevant term from the settlement agreement, the orders and judgments accepting
the Settlement Agreement in each of these underlying cases specifically mentioned the retention of
jurisdiction over Plaintiffs’ request for attorney’s fees. Accordingly, the Court finds that it has
jurisdiction over the attorney’s fees question and turns to the substantive issue of whether Plaintiffs’
requests are barred by the first-to-file or public disclosure provisions of the FCA.
III.
Defendants argue that the Settlement “Agreement makes clear that the parties agreed to
disagree as to Relators’ claims to attorneys’ fees, with both sides reserving their rights.” (Docket
No. 163 at 13). “The parties exchanged mutual releases, but agreed that the Agreement did not
‘release any claims Relators may have for reasonable attorneys’ fees, expenses and costs pursuant

9

to 31 U.S.C. § 3730(d).’” (Docket No. 163 at 13, quoting SA ¶ 15.c.(1)). A noted previously, to
determine whether that clause means what Plaintiffs or Defendants say, the Court must necessarily
interpret the Settlement Agreement.
A.
“A settlement agreement made during the course of litigation is a contract between the
parties, and as such, contract law governs disputes concerning the formation, construction, and
enforceability of the settlement agreement.” Waddle v. Elrod, 367 S.W.3d 217, 222 (Tenn. 2012)
(collecting cases). Likewise, “settlement agreements . . . in contemplation of litigation are
enforceable contracts.” Allison v. Hagan, 211 S.W.3d 255, 260 (Tenn. Ct. App. 2006).
Under both state and federal law,4 “[a] cardinal rule of contract interpretation is to ascertain
and give effect to the intent of the parties.” Allstate Ins. Co. v. Watson, 195 S.W.3d 609, 611-12
(Tenn. 2006); accord, In re AmTrust Fin. Corp., 694 F.3d 741, 749-750 (6th Cir. 2012). “In
interpreting contractual language, courts look to the plain meaning of the words in the document to
ascertain the parties’ intent.” Id. (quoting, Planters Gin Co. v. Fed. Compress & Warehouse Co., 78
S.W.3d 885, 889-90 (Tenn. 2002)). “Where a contract’s meaning is clear on its face, that meaning
controls.” In re AmTrust, 694 F.3d at 750. If “a contractual provision is ambiguous, a court is
permitted to use parol evidence, including the contracting parties’ conduct and statements regarding
the disputed provision,” Watson, 195 S.W.3d at 611, “though the goal is still to discern the parties’
intentions,” In re Amtrust, 694 F.3d at 749.
B.
4

The Settlement Agreement provides that it shall be governed by the laws of the United States. This
requires that the Court “apply federal common law rules of contract, taking direction from both state law and
general contract principles.” Barron v. Blue Cross Blue Shield of Mich., 534 Fed. App’x 344, 347 (6th Cir.
2013).

10

Defendants argue that under the Settlement Agreement “the parties agreed that the settlement
of the substantive ED admissions allegations would have no impact on whether Relators were
entitled to attorney’s fees.” (Docket No. 163 at 13). They write:
The Agreement states, without qualification, ‘that nothing in this Paragraph or this
Agreement shall be construed in any way to release, waive or otherwise affect the
ability of CHS to challenge or object to Relators’ claims for attorneys’ fees,
expenses, and costs pursuant to 31 U.S.C. § 3730(d).’ Settlement Agreement ¶ 8.
(Docket No. 163 at 13, italics by Defendants). They go on to contend that “[a] clearer reservation
of Defendants’ right to object to Relators’ fee petition on any and all grounds is difficult to
imagine.” (Id.).
Defendants’ use of highlighting is creative but understandable because it detracts from what
the Settlement Agreement provided. It specifically preserved Defendants’ ability to challenge or
object to Plaintiffs request for attorney’s fees only “pursuant to 31 U.S.C. § 3730(d).” That
provision, so far as relevant, provides:
If the Government proceeds with an action brought by a person under subsection (b),
such person shall . . . receive at least 15 percent but not more than 25 percent of the
proceeds of the action or settlement of the claim, depending upon the extent to which
the person substantially contributed to the prosecution of the action. . . . Any
payment to a person under [foregoing] shall be made from the proceeds. Any such
person shall also receive an amount for reasonable expenses which the court finds
to have been necessarily incurred, plus reasonable attorneys’ fees and costs. All such
expenses, fees, and costs shall be awarded against the defendant.
31 U.S.C. § 3730(d)(1).
The public disclosure bar is not referenced in Section 3730(d), but rather is found in Section
3730(e)(4). The first-to-file rule is reference obliquely at best in that “subsection (b)” relating to
actions by private persons (as opposed to those brought by the Attorney General under subsection
(a)) contains sub-part (5) which provides that “[w]hen a person brings an action under this

11

subsection, no person other than the Government may intervene or bring a related action based on
the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5).
Defendants insist that
the Settlement Agreement references Section 3730(d) because that is the section of
the FCA giving Relators the right to seek attorneys’ fees – the “under § 3730(d)”
modifies the phrase immediately preceding it: “Relators’ claims for attorneys’ fees,
expenses and claims.” It has nothing to do with how or on what grounds Defendants
might challenge or object to those attorneys’ fee claims.
(Docket No. 163 at 14). This is true enough: Section 3730(d) has nothing to do with the grounds
on which Defendants now seek to challenge fees; Section 3730(b)(5) and Section 3730(e)(4) do.
Defendants’ contention that the reservation of rights contained in the Settlement Agreement
could not be any clearer is simply wrong. Defendants could easily have specified that they intended
to raise a challenge to Plaintiffs’ entitlement to fees under the first-to-file or public disclosure
provisions, or, at a minimum, simply cited Section 3730(b)(5) and (e)(4), much like the Government
reserved specific statutory rights and negotiated a carve-out for those provisions.5 Defendants’
silence in response to “Recital G” which provided that “Relators and their counsel claim entitlement
under 31 U.S.C. § 3730(d) . . . to [their] reasonable expenses, attorneys’ fees and costs,” (Settlement
Agreement Recital G at 5), speaks volumes.
Given the stakes, it is difficult to believe that failure to mention the FCA’s first-to-file
provision, 31 U.S.C. § 3730(b)(5), or its public disclosure provision, 31 U.S.C. § 3730(e)(4)
anywhere in the 16-page Settlement Agreement was unintentional. Plaintiffs argue that Defendant

5

For example, in the paragraph immediately proceeding the one now in dispute, Relators agreed that
the Settlement Agreement was “fair, adequate, and reasonable under all the circumstance, pursuant to 31
U.S.C. 3730(c)(2)(B),” and that the Government was not waiving its ability “to contend that provisions in
the False Claims Act, including 31 U.S.C. §§ 3730(d)(3) and 3730(e), bar Relators from sharing in the
proceeds of this Agreement.” (Docket No. 75-1, Settlement Agreement p. 9-10 at ¶ 7)

12

were being “intentionally circumspect about [their] intentions” for fear that the settlement would not
be accomplished had Defendants true intentions been known. (Docket No. 167 at 10 n.6). Maybe
Defendants were too clever by a half for the fact remains that the government did proceed with all
seven of the underlying cases (including the four in this consolidated action), it intervened in all, and
settled each case. Under a straight forward reading of the statute and the Settlement Agreement
which specifically incorporates Section 3730(d) – in fact makes mention of that provision at least
six times, but makes no mention of either the first-to-file rule or the public disclosure bar – all
relators in this case are entitled to attorney’s fees.
Defendants’ reliance on cases like United States ex rel. Carter v. Haliburton Co., F.3d 171,
181 (4th Cir. 2013) for the proposition that “the first-to-file bar is ‘an absolute, unambiguous
exception-free rule,’”6 (Docket No. 163 at 4), and on cases like United States ex rel. Poteet v.
Medtronic, Inc., 552 F.3d 503, 515-16 (6th Cir. 2009) for the proposition that “the first-to-file rule
is jurisdictional, stripping court of the power to adjudicate a qui tam action”7 is misplaced. While
“[t]he point of the first-to-file bar is not to allow isolated misconduct to inoculate large companies
against comprehensive fraud liability” but “instead, is to prevent copycat litigation, which tells the
government nothing it does not already know,” Heath, 2015 WL 3852180, at *8, the Court is not
called upon to consider “the policies animating the FCA,” Poteet, 552 F.3d at 516, rather to give

6

This language may be an overstatement because the Supreme Court subsequently held that “a qui
tam suit under the FCA ceases to be ‘pending’ once it is dismissed”for purposes of the first-to-file rule,
Kellogg Brown & Root Serv., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970, 1979 (2015), suggesting
the existence of one such exception.
7

Even though Poteet is controlling authority, the notion that the first-to-file rule is jurisdictional has
been called into question in light of the fact that ‘the Supreme Court has ‘endeavored in recent years to ‘bring
some discipline’ to the use of the term ‘jurisdictional.’” United States ex rel. Heath v. AT&T, Inc., 2015 WL
3852180, at *6 (D.C. Cir. June 23, 2015) (quoting Gonzalez v. Thaler, 132 S.Ct. 641, 648 (2012)).

13

effect to the intention of the parties as expressed in the Settlement Agreement. Besides, the
supposedly exception-free rule seems to have gone by the wayside by virtue of Defendants’
agreement to pay Mason’s fees in addition to those of Plantz.
In settling the actions, Plaintiffs agreed to release all of their qui tam clams, even those claim
that fell outside the “Covered Conduct” described in Recital D of the Settlement Agreement, even
though they had the right to pursue the claims directly in accordance with 31 U.S.C. § 3730(c)(3)
if “the government elects not to proceed” with them. In doing so, Plaintiffs specifically claimed
entitlement to attorney fees and costs, and Defendants did not challenge that entitlement (as opposed
to reasonableness) in the Settlement Agreement.
Defendants contend that they “never had a chance to file a motion challenging” Relators
request for attorney’s fees under the first-to-file rule “because the case was under seal,” and that
“the approach advocated by Relators here would make it virtually impossible for the United States
to settle a multi-relator FCA case.” (Docket No. 163 at 18-19). The Court disagrees.
Defendant had several choices. They could have litigated with Relators and the United
States; could have agreed to settle only one suit with one Relator and continued to litigate the others;
they could have included a provision in the Settlement Agreement that specified they would only
pay attorneys’ fees for one relator; or they could have negotiated a carve-out in the Settlement
Agreement that specifically referenced the first-to-file bar and public disclosure provision. They
did none of those things. Instead they opted to omit the uncertainty entailed by litigating up to seven
cases and entered into a Settlement Agreement that did not reserve the right to challenge entitlement
to fees under either the first to file or public disclosure provisions of the FCA.
Simply put, the Settlement Agreement reserved Plaintiff’s entitlement to fees and did not

14

preserve any challenge based upon either the first-to-file rule or the public disclosure bar. As such,
the Court does not reach other arguments raised by Defendant, including its claim that the
negotiations leading up to the settlement suggest otherwise. Likewise, the Court does not reach
Plaintiffs’ assertion that, were the Court to rule otherwise, the Settlement Agreement would fail for
lack of consideration.8
IV.
Based upon the foregoing, the Court finds that Plaintiffs’ requests for attorney’s fees in this
action are not barred by the False Claims Act’s “first to file” or “public disclosure” provisions. In
so finding, the Court expresses no opinion on the propriety of the amount requested by each
Plaintiff, or whether requested fees should be based solely upon the unique and helpful information
that each Plaintiff provided the Government in relation to the National ED claim. The amount of
reasonable fees is an issue that the Court leaves to the Magistrate Judge in the first instance.
An appropriate Order will enter.
____________________________________
KEVIN H. SHARP
UNITED STATES DISTRICT JUDGE

8

As an aside, however, the Court notes Defendants’s argument that because Plaintiffs received a
share of the proceeds by virtue of their private agreement, they did not receive a “relator’s share” as
envisioned by 31 U.S.C. § 3730(d), but at the same time argue that Plaintiffs’ consideration for settling was
their getting a share of the relator’s share. This is reminiscent of Catch-22 and Maj. Major Major Major’s
conversation with First Sgt. Towser about the Major seeing people in his office only when he was not there.

15