USA ex rel Mohajer

Background

Arash Mohajer and Christopher Peterson brought this qui tam action under the False Claims Act, a federal law allowing private relators to sue on behalf of the United States for alleged fraud against the government. Mohajer was a pharmacist and Peterson was a licensed pharmacy technician who worked at the same Omnicare pharmacy. The defendants were Omnicare, Inc. and CVS Health Corp., which purchased Omnicare in 2015.

The allegations concerned drugs dispensed to people living in assisted-living and other residential facilities. The United States alleged that Omnicare’s systems allowed pharmacies to refill prescriptions after they had expired, run out of authorized refills, or otherwise become invalid. The alleged practices involved Omnicare’s OmniDX and Oasis systems and its cycle-fill program. The government alleged that Omnicare then submitted reimbursement claims to Medicare, Medicaid, and TRICARE containing false information.

The United States intervened in both this action and an earlier related qui tam action. After intervention, the United States’ complaint became the operative complaint for the federal claims. Mohajer and Peterson’s amended complaint retained one federal False Claims Act claim and added 25 claims under state-law versions of the False Claims Act, brought on behalf of 24 states and the District of Columbia.

First-to-File Rule

The court applied the False Claims Act’s first-to-file rule, 31 U.S.C. § 3730(b)(5). That rule prevents a person from bringing a related action based on the same underlying facts while an earlier action remains pending. The court explained that later complaints are related when they allege the same essential fraudulent scheme, even if they contain additional details or describe different methods of carrying it out.

The earlier action alleged that Omnicare used its computer systems and refill practices to dispense drugs without valid prescriptions and then sought reimbursement from Medicare and Medicaid. Mohajer and Peterson’s original complaint alleged the same essential scheme: manipulation of Omnicare’s systems, including OmniDX, Oasis, and cycle fill, to continue dispensing expired or otherwise invalid prescriptions and submit claims to federal healthcare programs.

The court rejected the relators’ argument that additional details in their complaint avoided the rule. It held that the earlier complaint had already given the government enough information to investigate the alleged scheme. The court also held that amending the complaint could not cure the first-to-file violation because an amendment does not begin a new action. Accordingly, the court dismissed the relators’ sole federal claim without prejudice under the first-to-file rule.

State-Law Claims and Disposition

The court concluded that the state-law claims had no independent basis for federal jurisdiction. The False Claims Act provision concerning state-law claims provides supplemental jurisdiction—authority to hear related state claims alongside a federal claim—but does not itself create federal-question jurisdiction. The court also concluded that diversity jurisdiction was unavailable because the states were the real parties in interest and states are not citizens for diversity purposes.

After dismissing the federal claim, the court declined to exercise supplemental jurisdiction over the 25 state-law claims. It noted that substantially similar state claims were already pending in the earlier related action and that some states might have their own first-to-file rules. The court therefore dismissed the remaining state-law claims without prejudice.

The court stated that the amended complaint was dismissed in its entirety, without prejudice to the interests of the United States, any state, or the District of Columbia in pursuing the dismissed claims. It directed the Clerk to remove the listed motions from the pending-motion list and close the case. The opinion addressed only Omnicare’s motion to dismiss Mohajer and Peterson’s amended complaint, not the other motions described as pending.