October 24, 2018- State of New Mexico ex rel. Hector Balderas v. Bristol-Myers Squibb Company, No. A-1-CA-36906

1 	IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 	Opinion Number: ____ _
3 Filing Date: October 24, 2018
4 	NO. A-1-CA-36906
5 	STATE OF NEW MEXICO ex rel.
6 HECTOR BALDERAS, ATTORNEY
7 GENERAL,
8 	Plaintiff-Appellee,
9 V.
10 	BRISTOL-MYERS SQUIBB COMPANY,
11 	SANOFI-AVENTIS U.S. LLC, SANOFI US
12 	SERVICES, INC. f/k/a SANOFI-AVENTIS
13 	U.S. INC., SANOFI-SYNTHELABO INC.,
14 	and DOE DEFENDANTS 1 to 100,
15 	Defendants-Appellants.
16 	APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
17 	Sarah M. Singleton, District Judge Pro Tern
18 	Office of the Attorney General
19 	Consumer & Environmental Protection
20 	P. Cholla Khoury, Assistant Attorney General
21 	Santa Fe, NM
22 Robles, Rael and Anaya, P.C.
23 	Marcus J. Rael, Jr.
24 	Albuquerque, NM
Court of Appeals of New Mexico
Filed 10/24/2018 10:34 AM
Mark Reynolds

1 Baron & Budd, P.C.
2 Daniel Alberstone
3 Jonas P. Mann
4 Peter KlausnerEncino, CA
5 Russell Budd
6 Dallas, TX
7 Jules Burton LeBlanc IV
8 Baton Rouge, LA
9 	for Appellee
10 Arnold & Porter Kaye Scholer LLP
11 	Kirk Ogrosky
12 Murad Hussain
13 	Washington, DC
14 Anand Agneshwar
15 	New York, NY
16 	Modrall, Sperling, Roehl, Harris & Sisk, P.A.
17 Earl E. DeBrine, Jr.
18 	Timothy C. Holm
19 Albuquerque, NM
20 	for Appellants

1 	OPINION
2 VANZI, Chief Judge.
3 {I} 	In this interlocutory appeal, we consider whether a federal district court's
4 dismissal of qui tam claims for failure to state a claim bars the State from pursuing
5 different claims arising from similar facts, where the State had not intervened in the
6 qui tam action. We conclude that it does not and, therefore, affirm the denial of
7 Defendants' motion to dismiss.
8 BACKGROUND
9 	Qui Tam Actions
10 	{2} 	In order to situate the facts leading to this appeal, we begin with an overview
11 	of qui tam actions generally and the relevant statutes that establish and govern them.
12 	"In a 'qui tam action,' a private plaintiff, ... known as a 'relator,' brings suit on
13 	behalf of the government to recover a remedy for a harm done to the government."
14 	36 Am. Jur. 2d Forfeitures and Penalties § 83 (2018) (footnotes omitted). "He or
15 	she pursues the government's claim against the defendant and asserts the injury in
16 	fact suffered by the government, which confers standing on the relator to bring the
17 	action as a representative of the [s]tate and as a partial assignee of the government's
18 	claim." Id. (footnotes omitted). A qui tam action arises only by statute, specifically
19 	authorizing a private party to sue on behalf of the government. Id. The federal False
20 	Claims Act (FCA) and state laws similar to it are typical qui tam statutes. See United

1 Seniors Ass 'n v. Philip Morris USA, 500 F.3d 19, 24 (1st Cir. 2007) (stating that the
2 FCA is a "typical and commonly-invoked qui tam action").
3 The FCA and the New Mexico Medicaid False Claims Act
4 	{3} 	"The [FCA] prohibits false or fraudulent claims for payment to the United
5 States, and authorizes civil actions to remedy such fraud to be brought by the
6 Attorney General or by private individuals in the government's name." 32 Am. Jur.
7 2d False Pretenses § 85 (2018); 31 U.S.C. §§ 3729-3733 (2012). Under the FCA,
8 " [t]he Attorney General diligently must investigate a violation of the false claims
9 statute[,]" and "[i ]f the Attorney General finds that a person has violated or is
10 	violating such statute, the Attorney General may bring a civil action against the
11 	person." 32 Am. Jur. 2d False Pretenses§ 85; 31 U.S.C. § 3730(a). In addition, the
12 	FCA permits relators to "file qui tam civil actions on behalf of the United States for
13 	the making of a false claim against government funds." 32 Am. Jur. 2d False
14 Pretenses§ 85; 31 U.S.C. § 3730(b).
15 	{4} 	Similarly, the New Mexico Medicaid False Claims Act (MFCA), NMSA
16 	1978, §§ 27-14-1 to -15 (2004), provides for liability where a person presents "a
17 claim for payment under the medicaid program knowing that such claim is false" or
18 	otherwise defrauds the state through the state medicaid program. Section 27-14-4.
19 	Like the FCA, the MFCA requires the Human Services Department (HSD) to
20 	investigate suspected violations and permits HSD to bring a civil action. Section 27-
2

1 	14-7(A). In addition, the MFCA contains a qui tam provision that permits "[a]
2 private civil action [to] be brought by an affected person for a violation of the
3 	[MFCA] on behalf of the person bringing suit and for the state." Section 27-14-7(B).
4 	{5} 	Both the FCA and MFCA require a relator to provide a copy of the complaint
5 	and 	written 	disclosure 	of material 	evidence 	possessed 	by 	the 	relator 	to 	the
6 government so that the government may determine whether there is substantial
7 evidence that a violation has occurred. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). The
8 complaint is sealed for at least sixty days to allow the government to undertake such
9 	an investigation. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). Upon completion of the
10 	investigation, the government may either "proceed with the action, in which case the
11 	action shall be conducted by the [g]overnment[,] " or decline to take over the action.
12 	31 U.S.C. § 3730(b)(4); § 27-14-7(E). If the government declines to pursue the
13 	claims in the relator's complaint, "the person who initiated the action shall have the
14 	right to conduct the action." 31 U.S.C. § 3730(c)(3); § 27-14-S(D). Regardless of
15 	whether the government intervenes in the action, the relator may receive a portion
16 	of any ensuing recovery. 31 U.S.C. § 3730(d); § 27-14-9.
17 	{6} 	The FCA and MFCA differ in that, under the MFCA, the relator may continue
18 	the action only "[i]fthe department determined that there is substantial evidence that
19 	a violation of the [MFCA] has occurred" and that "[i]f the department determines
3

1 that there is not substantial evidence that a violation has occurred , the complaint
2 	shall be dismissed." Section 27-14-7(C), (E)(2).
3 	The First Suit: In re Plavix Marketing, Sales Practice & 	Products Liability
4 Litigation
5 	{7} 	The first suit at issue was initiated in March 2011 by relator Elisa Dickson
6 	(Relator), who filed a complaint alleging that Bristol-Myers Squibb Company ,
7 	Sanofi-Aventis U.S., LLC; Sanofi-Aventis U.S. , Inc.; and Sanofi-Synthelabo, Inc.,
8 	(Defendants), 	manufacturers 	and 	marketers 	of 	the 	prescription 	drug 	Plavix ,
9 promoted Pla vix in violation of the FCA and various states' similar fraud statutes,
10 	including New Mexico 's MFCA. See In re Plavix Mktg., Sales Practice & Prods.
11 	Liab. Litig. (No. JI) v. Bristol-Myers Squibb Co.,_ F. Supp. 3d _, 2017 WL
12 	2780744, at *1-4 (D.N.J. 2017). 1 Pursuant to the provisions of the MFCA, Relator
13 	served New Mexico 	with "a copy of the 	complaint and written disclosure 	of
14 	substantially all material evidence and information [Relator] possesses." Section 27-
15 	14-7(C). New Mexico declined to intervene in Relator's suit and, therefore, declined
16 to take over litigation of the MFCA claim. In re Plavix Mktg., 2017 WL 2780744, at
17 	*2.
1Relator filed the initial complaint in Illinois, but the suit was transferred to
the United States District Court for the District of New Jersey to be part of the Plavix
Multi-District Litigation. Id. at *2.
4

1 {8} 	Relator filed several amended complaints. Id. 	In August 2015, the federal
2 district court dismissed the New Mexico MFCA claim, among others, for failure to
3 state a claim for relief. Id. 	A year later, in August 2016, Relator filed a fourth
4 amended complaint reasserting the MFCA claim, among others. Id. 	at *3. 	On
5 Defendants' motion, the federal district court dismissed Relator's fourth amended
6 complaint in June 2017. Id. at * 1, *3. Relator did not appeal the dismissal or request
7 permission 	to 	amend 	the 	complaint 	again. 	This 	final 	dismissal 	is 	central 	to
8 Defendants' claim preclusion argument.
9 	The Second Suit: State of New Mexico ex rel. Hector Balderas, Attorney General
10 	v. Bristol-Myers Squibb, et al.
11 	{9} 	Shortly after Relator filed the fourth amended complaint in In re Plavix
12 Marketing, but before its final dismissal, the New Mexico Attorney General (the
13 	State) brought the present action in the First Judicial District Court. The complaint
14 	alleges that "Defendants' false, deceptive, and unfair labeling and promotion of their
15 	prescription antiplatelet drug Plavix" violated the New Mexico Unfair Practices Act
16 	(UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended through 2009); the New
17 	Mexico Medicaid Fraud Act (MFA), NMSA 	1978, §§ 30-44-1 to -8 (1989, as
18 	amended through 	2004); 	and the 	New 	Me xico 	Fraud Against 	Taxpayers 	Act
19 	(FATA), NMSA 1978, §§ 44-9-1 to -14 (2007, as amended through 2015), as well
20 	as common law and equitable causes 	of action. 	The complaint did not allege
21 	violations of the MFCA.
5

1 {IO} 	Defendants moved to dismiss the State's complaint, arguing that the State had
2 failed to state its claims. They also maintained that the suit should be dismissed
3 without prejudice or stayed pending resolution of the In re Plavix Marketing action
4 and that the State was inappropriately splitting its claims. Without ruling on the
5 substantive arguments in the motion, the state district court stayed the action pending
6 the outcome of Defendants' motion to dismiss in In re Plavix Marketing. Once the
7 federal district court dismissed Relator' s fourth amended complaint, the state district
8 court lifted the stay and ordered supplemental briefing on the impact of the dismissal
9 	of Relator's claims on the State's complaint and Defendants' motion to dismiss. In
10 	supplemental briefing, Defendants argued that the doctrine of claim preclusion bars
11 	the State's complaint. They also argued that, even if claim preclusion did not bar the
12 	State's claims in their entirety, the claims based on the MFA and FATA should be
13 	dismissed for failure to state a claim for the same reasons relied on by the federal
14 	district court.
15 	{11} 	The state district court granted in part and denied in part Defendants' motion
16 to dismiss for failure to state a claim. It found that the State' s MF A claim failed as a
17 	matter of law and that the economic loss doctrine barred the State's negligence
18 	claim. It therefore dismissed those claims with prejudice. It found that the State had
19 	inadequately pleaded the UP A and equitable tolling claims but dismissed those
20 	claims without prejudice and ordered the State to file an amended complaint if it
6

1 chose to rectify the deficiencies in the first complaint. The court found the remaining
2 claims adequately pleaded. The State then filed its first amended complaint, which
3 includes claims for violations of the UP A and FAT A, as well as common law claims
4 for fraud and unjust enrichment.
5 {12} 	In a separate order, the state district court denied Defendants' motion to
6 dismiss the State's complaint on claim preclusion grounds. Although it stated that
7 Relator's 	claims 	had 	been 	dismissed 	"with 	prejudice," 	it 	found 	that 	"[ claim
8 preclusion] does not apply here because the causes of action are not the same in the
9 two suits" and that "[R]elator in [In re Plavix Marketing] did not assert any of the
10 	claims the State asserts in this case, but rather only a single New Mexico [MFCA]
11 	claim." It also stated that "while [R]elator ... stood in the shoes of the State of New
12 	Mexico for purposes of the New Mexico [MFCA] claim, [R]elator did not stand in
13 	the State's shoes for purposes of the claims asserted by the State here ." Finally, the
14 	state district court concluded that "in a case such as this, where [R]elator's claims
15 	were 	dismissed 	based 	on 	a 	failure 	to 	comply 	with 	the 	heightened 	pleading
16 requirements of [Federal Rule of Civil Procedure] 9(b ), and not based on the merits
17 	of the claim, it would be inappropriate to bar the State's claims."
18 	{13} 	However, the state district court also found that "[r]egarding the application
19 	of [claim preclusion] only," its order " (l) does not practically dispose of the merits
20 	of the action, (2) 	involves a controlling question of law as to which there is
7

1 substantial ground for difference of opinion, and (3) an immediate appeal from this
2 order or decision may materially advance the ultimate termination of the litigation."
3 See NMSA 1978, § 39-3-4(A), (B) (1999) (providing for interlocutory appeal of
4 district court orders pursuant to this Court's appellate jurisdiction). It therefore
5 certified for interlocutory appeal the portion of the order pertaining to application of
6 claim preclusion. 	This Court granted Defendants' 	application for 	interlocutory
7 appeal. See Rule 12-203 NMRA (governing interlocutory appeals).
8 DISCUSSION
9 	{14} 	The issue before the Court is whether the federal court's dismissal of Relator's
10 	J\1FCA claim precludes the State's claims for violations of the UPA and FATA, as
11 	well as common law fraud and unjust enrichment. We review such questions of law
12 	de novo. BankofN.Y v. Romero, 2016-NMCA-091, ,r 15,382 P.3d 991. In addition,
13 	" [b] ecause 	the 	prior 	action 	was 	in 	federal 	court, 	federal 	law 	determines 	the
14 	preclusive effect of a federal judgment." Moffat v. Branch, 2005-NMCA-103, ,r 11,
15 	138 N.M. 224, 118 P.3d 732; see Restatement (Second) of Judgments§ 87 (1982)
16 	("Federal law determines the effects under the rules of [claim preclusion] 	of a
17 judgment of a federal court."). However, this Court may rely on both federal and
18 New Mexico law on claim preclusion because " [f]ederal law and New Mexico law
19 	are not divergent on claim preclusion doctrine, 	and both find the Restatement
20 (Second) of Judgments ... persuasive." Moffat, 2005-NMCA-103, ,r 11.
8

1 General Claim Preclusion Law
2 {15} 	" [Claim preclusion] prevents a party or its privies from repeatedly suing
3 another party for the same cause of action when the first suit involving the parties
4 resulted in a final judgment on the merits." Rosett e, Inc. v. US. Dep 't of the Interior,
5 2007-NMCA-136, i-f 33 , 14 2 N.M. 717, 169 P.3d 704. Generally, the doctrine applies
6 where "three elements are met: ( 1) a final judgment on the merits in an earlier action,
7 (2) identity of parties or privies in the two suits, and (3) identity of the cause of action
8 in both suits." Id. When these elements are satisfied, the defense of claim preclusion
9 bars relitigation not only of claims actually brought by the plaintiff and its privies,
10 	but also claims that could have been brought in the first action. Kirby v. Guardian
11 	Life In s. Co. of Am., 2010-NMSC-014, i-f 61 , 148 N.M. 106, 231 P.3d 87.
12 	{16} 	For claim preclusion to appl y, the first suit must have ended in a "judgment
13 	on the merits." Rosett e, Inc. , 2007-NMCA-136, i-f 33 . Generall y, a dismissal for
14 	failure to state a claim under Federal Rule of Civ il Procedure 12(b)(6) is a "judgment
15 	on the merits" for purposes of claim preclusion. Federated Dep 't Stores, In c. v.
16 Moiti e, 452 U.S. 394, 399 n.3 (1981). 2 Although this general rule is often stated
17 broadly, it is not without nuance. Because " [a] motion to dismiss for failure to state
2 "Because the language of Rule 1-01 2 [NMRA] closely parallels that of its
federal counterpart, Rule 12 of the Federal Rules of Civil Procedure, we find federal
authority interpreting Rule 12 ... instructive." Doe v. Roman Catholic Diocese of
Boise, Inc., 1996-NMCA-057, i-f 5, 121 N.M. 738, 918 P.2d 17. We also cite to Rule
1-012(B )(6) NMRA and Federal Rule of Civ il Procedure 12(b)( 6) interchangeably.
9

1 a claim under Rule 1-0 l 2(B )( 6) ... tests the legal sufficiency of the complaint, not
2 the facts that support it[,]" Wallis v. Smith, 2001-NMCA-Ol 7, ,16, 130 N.M. 214, 22
3 P.3d 682, the designation of such a dismissal as "on the merits" is something of a
4 misnomer. In Kirby, the New Mexico Supreme Court explained that " [a] dismissal
5 with prejudice is an adjudication on the merits only to th e extent that when a claim
6 has been dismissed with prejudice, the [final judgment on the merits] element of
7 [claim preclusion] ... will be presumed so as to bar a subsequent suit." 201 O-NMSC-
8 014, ,166 (emphasis added). This is so because " [i]f this were otherwise, plaintiffs
9 could simply ignore dismissals and file the same claim as many times as they wished,
10 	so long as the claim never progressed to a determination of the substantive issues."
11 	Id. Thus, the intent behind considering a Rule l 2(b )( 6) dismissal as "on the merits"
12 	is practica l: to limit repetitive filings. See Kirby, 2010-NMSC-O 14 , ,1 66. Such a
13 	dismissal obviously does not involve "a judicial determination of' the actual merits.
14 See id. ,167. Conversely, "[t]he words 'without prejudice' when used in an order or
15 	decree generally indicate that there has been no resolution of the controversy on its
16 	merits and leave the issues in litigation open to another suit as if no action had ever
17 been brought." Bralley v. City of Albuquerqu e, 1985-NMCA-043, ,1 18, 102 N.M.
18 	715 , 699 P.2d 646.
10

1 Defendants' Arguments
2 {17} 	Defendants contend that the elements 	of claim preclusion are met here.
3 Defendants argue that the In re Plavix Marketing dismissal was "on the merits"
4 because Relator either failed to plead the requisite materiality under 	Universal
5 Health Services, Inc. v. United States ex r el. Escobar, 	U.S._,_, 136 S. Ct.
6 	1989, 2001-03 (2016), or failed to allege conduct recognized as violative of the FCA.
7 See United States ex rel. Petratos v. 	Gene ntech Inc., 855 F.3d 481, 487 (3d Cir.
8 2017) ("A [FCA] violation includes four elements: falsity, causation, knowledge,
9 and materiality."); In re Plavix Mktg., 2017 WL 2780744, *8 (same). They also
10 	claim that the State was in privity with Relator because Relator represented the
11 	State 's interests in the In re Plavix Marketing action. Finally, they argue that the
12 	State 's 	claims "arise out 	of a common nucleus 	of operative facts" 	related to
13 	Defendants' 	marketing practices and, 	therefore, 	constitute the 	"same cause 	of
14 	action" as in In re Plavix Marketing. In sum, Defendants maintain that, as a privy to
15 	Relator, the State was required to bring all of its claims in In re Plavix Marketing,
16 	and having failed to do so, the State must be barred from bringing them in a different
17 	suit.
18 	Claim Preclusion in the Context of Qui Tam Actions
19 	{18} 	We first observe that, as a general proposition, "[i]f [the relator] had litigated
20 a qui tam action to the gills and lost, neither another relator nor the [government]
11

1 could start afresh." United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849,
2 	853 (7th Cir. 2009). This is true because the relator sues on behalf of the government
3 to vindicate the government's interests, and, although the government is not a named
4 party to the relator's suit, it is a real party in interest. United States ex rel. Eisenstein
5 v. City ofNew York, 556 U.S. 928, 934 (2009) (stating that the government, although
6 a real party in interest, is not a "party" to a qui tam action).
7 {19} 	However, courts have also recognized that, under certain circumstances, the
8 government's role in vindicating public interests militates against preclusion of its
9 claims. Cf Nathan D. Sturycz, The King and I?: An Examination of the Interest Qui
10 	Tam Relators Represent and the Implications for Future False Claims Act Litigation,
11 	28 St. Louis U. Pub. L. Rev. 459, 462-63 (2009) (noting that even though "(i]n the
12 	non-FCA context, the concepts of preclusion would normally prevent duplicative
13 	litigation[, a]pplication of preclusion 	[in FCA cases] 	is muddled . . . by the
14 	distinction between the interests represented in a prior private cause of action and
15 	those represented in FCA litigation"). Thus, courts have repeatedly found that suits
16 	by or on behalf of the government should not be precluded by certain actions of a
17 private party, even when that party acts as a qui tam relator. This is especially true
18 	when the first suit is dismissed for reasons unrelated to the merits of the claims.
19 	{20} 	For example, federal courts have relied on the fact that a Rule 12(b)(6)
20 	dismissal is based only on the relator' s complaint, not the factual bases underlying
12

1 the allegations, to hold that such a dismissal does not preclude the government's
2 claims when the government has not intervened. See, e.g., United States ex rel.
3 	Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 455-56 (5th Cir. 2005).
4 {21} 	In Williams, the district court dismissed the relator's FCA claims because the
5 relator failed to plead them with sufficient particularity under Rules 12(b)(6) and
6 (9)(b). Williams, 417 F.3d at 455. The district court dismissed the complaint with
7 prejudice as to both the relator and the government, stating that it was "dismissing
8 the claims against the government with prejudice because it believed 'the United
9 States has had ample opportunity to participate in the prosecution of those claims if
10 	[it] had any notion that any of them has the slightest merit,' " suggesting that the
11 	government's failure to intervene indicated that it found the claims meritless. Id.
12 	{22} 	The United States Court of Appeals for the Fifth Circuit reversed and modified
13 	the dismissal to be without prejudice as to the government. Id. at 456. First, the court
14 	dismissed as "unreasonable" any speculation about the government's reasons for not
15 	intervening and the district court's inference that the government would have
16 	intervened if it found the relator's FCA claims "meritorious." Id. at 455. It observed
17 that the FCA requires the Attorney General to conduct an investigation of the
18 	relator's allegations, but the FCA "does not require the government to proceed if its
19 	investigation yields a meritorious claim." Id. "Indeed, absent any obligation to the
20 	contrary, it may opt out for any number of reasons. For example, a decision not to
13

1 intervene may 'not necessarily be an admission by the [government] that it has
2 suffered no injury in fact, but rather the result of a cost-benefit analysis.' " Id.
3 (alterations omitted) (quoting United States ex rel. Berge v. Bd. of Trs. of th e Univ.
4 	of Ala., 104 F.3d 	1453 , 1458 (4th Cir. 	1997)). The court concluded, " [G]iven
5 the Rule 9(b) deficiencies, the government may have determined that the costs
6 associated with proceeding based on a poorly drafted complaint outweighed any
7 anticipated benefits." Williams, 417 F.3d at 455 .
8 	{23} 	The 	Williams 	court then noted that a dismissal with prejudice as to the
9 government would give private parties "perverse incentives" to file poorly drafted
10 	or improperly pleaded qui tam actions. Id. "By essentially requiring the government
11 	to intervene in order to avoid forfeiting any future claims against the defendant,
12 private parties would have the added incentive to file FCA suits lacking in the
13 	required particularity, knowing full well that the government would be obligated to
14 	intervene and ultimately ' fill in the blanks' of the deficient complaint." Id. It went
15 	on to state that the district court 's approach would allow "a relator, in the most
16 	egregious of circumstances, to make sweeping allegations that, while true, he is
17 	unable to effectively litigate, but which nonetheless bind the government, via [claim
18 	preclusion] , and prevent it from suing over those concerns at a later date when more
19 	information is available." Id. 	(internal quotation marks and citation omitted). It
14

1 therefore concluded that the district court had abused its discretion by dismissing the
2 complaint with prejudice as to the government. Id. at 456.
3 	{24} 	Without deciding the preclusive effect of a Rule 12(b)(6) dismissal on future
4 related actions, but relying on Williams, the Eleventh Circuit also modified a district
5 court 's 	dismissal 	for 	failure 	to 	state 	a 	claim 	to 	be 	without prejudice 	to 	the
6 government. Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1057 (11th Cir. 2015).
7 A number of federal district courts have also followed Williams and held that a
8 dismissal 	of a relator's 	complaint for 	insufficient pleading 	should be without
9 prejudice to the government. In each of these cases, the government had declined to
10 	intervene in the relators' actions. See, e.g., United States v. KForce Gov 't Sols. , Inc.,
11 	No. 8: 13-cv-1517-T-36TBM, 2014 WL 5823460, at *6 n.2, *9 (M.D. Fla. Nov. 10,
12 	2014) ( dismissing an FCA complaint for failure to satisfy the Rule 9 pleading
13 	requirements and stating that dismissal is without prejudice to the government);
14 	United States ex rel. Boros v. Health Mgmt. Assocs. (Health Mgmt. I) , No. 4:10-cv-
15 	10013-KMM, 2013 WL 12077816, at *1-2 (S.D. Fla. July 26, 2013) (clarifying that
16 	dismissal was without prejudice to the government after the relator 's FCA complaint
17 was dismissed for failure to state a claim); United States ex rel. Banigan v. Organon
18 	USA, Inc., Civil Action H-08-3314, 2013 WL 12142351, at *34 (S.D. Tex. Feb. 1,
19 	2013) (agreeing that "the dismissal [for inadequate pleadings] should be without
20 	prejudice to the 	[government] 	because it has no involvement in preparing the
15

1 complaint" and stating that "if the [c]ourt dismisses [the r]elators' complaint on
2 insufficient pleading grounds, the dismissal would not preclude the government
3 from bringing or continuing an action involving the same or similar claims"); United
4 States ex rel. Rostholder v. Omnicare, Inc., No. CCB-07-1283, 2012 WL 3399789,
5 at * 15 (D. Md. Aug. 	14, 2012) (stating that " [t]he government's decision not to
6 intervene ... does not suggest that the government necessarily believed that no FCA
7 case was viable ... [and a]ccordingly, it would be inappropriate to dismiss with
8 prejudice as to the [government] or as to the states or localities on whose behalf
9 relator brought this claim" (emphasis added)), a.ff'd, 745 F.3d 694 (4th Cir. 2014).
10 But see Lusby, 570 F.3d at 853 (stating that the district court erred in ordering a qui
11 	tam complaint dismissed with prejudice to the plaintiff and without prejudice to the
12 	government, but holding that judgment in a private suit did not bar a later qui tam
13 	action).
14 	{25} 	Similarly, courts have dismissed a complaint with prejudice to the relator, but
15 	without prejudice to the government, where the relator failed to prosecute or acted
16 	improperly in litigation. See, e.g., United States ex. rel. Prince v. 	Va. Res. Auth.,
17 	2014 WL 3405657, at *3 (W.D. Va. July 10, 20 14) (failure to prosecute), a.ff'd, 593
18 	Fed. App'x 23 0 (4th Cir. 2015); United States ex rel. King v. DSE, Inc., No. 8:08-
19 	CV-2416-T-23EAJ, 2013 WL 610531, at * 11 (M.D. Fla. Jan. 17, 2013) (litigation
20 misconduct); cf United States ex rel. Vaughn v. United Biologics, L.L.C., _ 	F.3d.
16

1 _, 2018 WL 5000074, at *5 (5th Cir. 2018) (stating that "when the case's outcome
2 is decided by the relator's voluntary decision to quit, courts tend not to bind the
3 [g]overnment to that decision automatically" and collecting cases).
4 {26} 	Although distinguishable on its facts, 	State ex rel. 	Peterson v. 	Aramark
5 	Correctional Services, LLC, 2014-NMCA-036, 321 P.3d 128, echoes the reasoning
6 in Williams. In Peterson, this Court considered whether a summary judgment in the
7 plaintiffs personal injury suit barred the same plaintiffs later qui tam action against
8 the same defendant. 2014-NMCA-036, ,r,r 1-2. Holding that it did not, this Court
9 noted that, as a qui tam relator, the plaintiff represented the state, rather than himself,
10 	and therefore, his capacity in the two suits was not the same and the "same parties
11 	or their privies" element of claim preclusion was not met. Id. 	,r,r 24, 33. In its
12 	analysis, this Court, like Williams, recognized that claim preclusion in the qui tam
13 	context could operate adverse to the public interest. Peterson, 2014-NMCA-036,
14 ,r 30. It stated that" 'it would be inappropriate to snuff out the government's interest
15 	[in the qui tam action] just because a potential relator thoughtlessly omitted a qui
16 	tam claim from a[n earlier] personal suit.'" Id. (alterations omitted) (quoting Lusby,
17 	570 F .3d at 852). "[W]ere a personal lawsuit held to preclude a qui tam suit on claim
18 	preclusion grounds, the government would be incapable of vindicating its interest
17

1 by bringing a new qui tam suit, either on its own or through another relator" because
2 the government would be bound by the judgment in the personal lawsuit. Id. 3
3 {27} 	Defendants argue that the Williams holding is inapposite for three reasons.
4 Defendants first argue that the United States Supreme Court' s decision in Eisenstein
5 supersedes 	Williams. 	Defendants rely on the statement in Eisenstein 	that "the
6 [government] 	is bound by the judgment in all FCA actions regardless 	of its
7 participation in the case." 556 U.S. 	at 936. But the Eisenstein 	Court was not
8 considering the issue here; rather, the issue there was whether the government was
9 a "party" to a privately initiated FCA action such that the private party could benefit
10 	from the longer period in which to appeal provided to the government under Federal
11 	Rule of Appellate Procedure 4(a)(l)(B). Eisenstein, 556 U.S. at 931. "The general
12 	rule is that cases are not authority for propositions not considered." Sangre de Cristo
13 	Dev. Corp. v. City of Santa Fe, 1972-NMSC-076, if 23, 84 N.M. 343, 503 P.2d 323.
14 	{28} 	In addition, the statement relied on by Defendants was a statement of the
15 	appellant's argument, not a statement of law by the Court. See Eisenstein, 556 U.S.
16 	at 936 	("[P]etitioner relies on the fact that the [government] 	is bound by the
17 judgment in all FCA actions regardless of its participation in the case." (emphasis
3
Notably, although it was unnecessary for the Peterson Court to discuss this
fact under the circumstances of that case, "the district court granted [the defendant's]
motion for summary judgment, and dismissed, with prejudice, all claims brought on
behalf of [the qui tamp Jlaintiff, stating, however, that its order did not prejudice the
[s]tate's ability to bring a related action based on the same facts." Id. ,r 20.
18

1 added)). "[I]n light of Eisenstein's narrow holding-that the [g]overnment was not
2 a 'party' for the purposes of[Rule] 4(a)(l)(B)-it would be inappropriate to interpret
3 this passing observation so broadly." Vaughn, 2018 WL 5000074, at *6 (rejecting
4 an argument that Eisenstein abrogated Williams); accord USA 	ex rel. Mastej v.
5 Health Mgmt. Assocs. (Health Mgmt. II), No. 2:ll-cv-89-FtM-29DNF, 2014 WL
6 	12616929, at *2 (M.D. Fla. June 10, 2014); Health Mgmt. I, 2013 WL 12077816, at
7 * 1. Finally, as shown above, a number of federal courts have relied on Williams after
8 Eisenstein 	was decided in 2009. But see Lusby, 	570 F.3d at 853 	(stating that
9 Eisenstein foreclosed dismissal without prejudice as to the government).
10 	{29} 	Defendants 	next 	argue 	that 	the 	policy 	considerations 	in 	Williams 	are
11 	inapposite because the MFCA "required New Mexico to determine whether there
12 	was substantial evidence of a violation ... and to dismiss the claim if none existed."
13 	They argue that this "obligation means that no qui tam complaint brought under the
14 	[MFCA] should ever receive the State's approval to proceed if, like the [Williams]
15 	complaint, it is so facially deficient that it lacks substantial evidentiary support." It
16 	is true that Section 27-14-7 requires that, when a claim is supported by substantial
17 	evidence, the state must either pursue the claim or permit the relator to pursue it. See
18 	§ 27-14-7(E) (providing that if there is substantial evidence, the state "shall: (1)
19 	proceed with the 	action, in which 	case the 	action shall be 	conducted by the
20 	department; or (2) notify the court and the person who brought the action that it
19

1 declines to take over the action" (emphasis added)). However, Defendants' argument
2 conflates a determination of evidence supporting a claim with a determination of the
3 adequacy of the relator's complaint. The state is required to determine only whether
4 "there is substantial evidence that a violation has occurred," not whether the relator's
5 complaint adequately alleges a violation. Section 27-14-7(C); see Wallis, 2001-
6 NMCA-017, ,-r 6 (stating that "[a] motion to dismiss for failure to state a claim under
7 Rule 1-012(B)(6) ... tests the legal sufficiency of the complaint, not the facts that
8 support it"). To hold that the state is required to involve itself in the articulation of
9 the relator's claims in the complaint is tantamount to requiring the state to intervene
10 	in the action. Such a result is contrary to the clear intent of the MFCA to deputize
11 	private parties to seek recovery on the state's behalf. See Berge, 104 F.3d at 1458
12 	(stating that "the plain language of the [FCA] clearly anticipates that even after the
13 	[government] has 'diligently' investigated a violation ... , the [g]overnment will not
14 	necessarily pursue all meritorious claims; otherwise there is little purpose to the qui
15 	tam 	provision 	permitting 	private 	attorneys 	general"); 	see 	Vaughn, 	2018 	WL
16 	5000074, 	at 	*5 	(citing 	Williams 	for the proposition that "the non-intervening
17 	[g]overnment should not be bound by the fate of an incompetent relator, lest it be
18 	forced to intervene in every action"); see also§ 27-14-8(D) ("If the state elects not
19 to proceed with the action, the person bringing the action shall have the right to
20 	conduct the action."); cf Williams, 417 F.3d at 455 (stating that the government
20

1 might decline to intervene, even if there is evidence of a violation, because "the costs
2 associated with proceeding based on a poorly drafted complaint [by the relator]
3 outweig hed any anticipated benefits" ).
4 	{30} 	Finally, Defendants contend that Williams is factually distinguishable from
5 the circumstances here. They argue that in Williams, the qui tam complaint was
6 	dismissed because it was "s o deficient [under Rule 9(b )] that the court never reached
7 the merits of the claim[,]" Williams, 417 F.3d at 456, whereas here Relator 's claim
8 was instead dismissed based on the "heightened pleading standard for materiality
9 under the FCA," rather than the pleading requirements for fraud under Rule 9(b ). In
10 	re Plavix Mktg., 2017 WL 2780744, * 10. They point out that the federal district court
11 	found that Relator had "pleaded herself out of court" by alleging facts that negated
12 	an essential element of an FCA claim. Thus , because Relator "could not plead the
13 	required element of 'materiality' as a matter of law[,] " the dismissal was on the
14 	merits.
15 	{31} 	We do not read Williams as narrowly as Defendants. The Williams holding
16 	was not limited to the Rule 9(b) pleading standard. Instead, the core of the Williams
17 holding is the failure to adequately plead an FCA claim under Rule 	12(b )(6),
18 	regardless of the standard applied. See Williams, 417 F.3d at 453 (stating that the
19 	defendant " moved to dismiss under Rule l 2(b )( 6) for failure to state a claim because
20 	the complaint did not comply with the requirements of Rule 9(b )"). The reasoning
21

1 for the holding was that the government should not be bound by the relator's
2 weaknesses in pleading what might be a valid claim, whatever those weaknesses are.
3 In other words, "[w ]hy would Congress want [a poorly plead but meritorious] earlier
4 suit to bar a later potentially successful suit that might result in a large recovery for
5 the [g]overnment?" Kellogg Brown & Root Servs., In c. 	v. 	United States ex rel.
6 Carter, 135 S. Ct. 1970, 1979 (2015); see id. (rejecting an argument that "a first-
7 filed suit would bar all subsequent related suits even if that earlier suit was dismissed
8 for a reason having nothing to do with the merits"). Hence, even if the In re Plavix
9 Marketing dismissal was not based on Rule 9(b ), an issue we need not decide,
10 	Williams would still apply here. See KForce Gov 't Sols., 2014 WL 5823460, at *9
11 	(dismissing the relator's complaint where "the facts ... plead ... preclude a claim
12 	under the FCA" with prejudice, but without prejudice as to the government).
13 	Dismissal of Relator's Qui Tam Action Does Not Bar the State's Claims
14 	{32} 	The dismissal order in In re Plavix Marketing does not specify whether it is
15 	with or without prejudice to Relator or the government. In re Plavix Mktg., 2017 WL
16 	2780744, at *l , *23. Nevertheless, because the order did not provide for a fifth
17 	amendment and disposed of all of Relator's claims, we construe it as an adjudication
18 	on the merits as to Relator, consistent with the general rule that a dismissal under
19 	Rule 12(b)(6) is an adjudication on the merits for claim preclusion purposes. Moitie,
20 	452 	U.S. 	at 399 n.3 	(stating that " [t]he dismissal for failure to 	state a claim
22

1 under Federal Rule of Civil Procedure 12(b)(6) is a judgment on the merits" (internal
2 quotation marks and citation omitted)); see Kirby, 2010-NMSC-014, 1 66 (stating
3 that this approach prevents repetitive suits); Bralley, 1985-NMCA-043, 1 14 ("An
4 order dismissing a party's entire complaint without authorizing or specifying a
5 definite time for leave to file an amended complaint, is a final order for purposes of
6 appeal.").
7 {33} 	However, for the reasons stated in Williams and its progeny, we construe the
8 order as without prejudice to the government. Cf Bralley, 1985-NMCA-043, 1 18
9 (stating that "[t]he words 'without prejudice' when used in an order or decree
10 	generally indicate that there has been no resolution of the controversy on its merits
11 	and leave the issues in litigation open to another suit as if no action had ever been
12 brought"). Thus, as to the State, the federal district court's dismissal of Relator's
13 	fourth 	amended complaint is not a "final judgment on the 	merits" 	for 	claim
14 preclusion 	purposes. 	"Because 	the 	claim 	preclusion 	doctrine 	does 	not 	bar 	a
15 	subsequent lawsuit unless all [of the claim preclusion] elements are met, we do not
16 	consider the 	parties' 	remaining 	claim preclusion arguments." 	Peterson, 	2014-
17 NMCA-036, 133.
18 	CONCLUSION
19 	{34} 	Consistent with federal FCA and claim preclusion law, we construe the In re
20 	Plavix Marketing dismissal as without prejudice to the State's claims, and, therefore,
23

1 hold that the dismissal does not bar the State 's present claims under the UPA and
2 FATA, as well as common law claims for fraud and unjust enrichment. Accordingly,
3 we affirm the state district court's denial of Defendants ' motion to dismiss.
4 	ps} 	IT IS SO ORDERED.
5
6 	L
7 WE CONCUR:
s9~~
9 J. MILES HANISEE, Judge
24